Urban Transit

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Randal O'Toole

June 2010

Overview
History of Urban Transit
Six Problems with Rail Transit
Six Myths of Rail Transit
Private Transit Solutions
 

Overview

Rail transit has long had a presence in American cities. The first commuter trains served the suburbs of Boston in 1838. The first successful electric streetcar opened in Montgomery, Alabama, in 1886. Chicago opened the first electric-powered elevated train in 1895, while New York opened the first electric heavy-rail subway line in 1904.1 Electric-powered commuter trains date to 1906.

During the mid-20th century, private transit companies served the vast majority of American cities. These companies operated profitable, if declining, businesses in the face of increasing auto ownership. A big handicap was that transit companies were considered public utilities and were highly regulated, having to seek government permission for every route change, fare increase, or other service change. For private transit firms, buses were becoming a less expensive, more flexible, and safer transit mode than streetcars or other types of rail transit.

The beginning of the end for private transit came in 1964 with the Urban Mass Transit Act. The act promised federal capital grants to any public agencies that took over private transit companies. Within a decade, the private transit industry was virtually wiped out, replaced almost completely by tax-subsidized public agencies.

Today, city governments that are frustrated with automobiles and congestion are turning to the 19th century technology of rail transit for relief. But pumping subsidies into rail transit is based on a nostalgic view of the past and is not economically sound. It also won't solve America's congestion woes.

The Department of Transportation's Federal Transit Administration has an annual budget of more than $10 billion, nearly all of which is spent on subsidies to state and local governments.2 In addition, the economic stimulus bill of 2009 added a further $8 billion in subsidies over a period of years.3 Through these subsidies and related regulations, federal policymakers play a major role in shaping urban transportation choices.

Transit funding is costly to taxpayers, and it is not a proper function of the federal government. It encourages state and local governments to pursue high-cost and less-efficient transportation solutions—in particular, rail transit. Outside of a few hyper-dense cities in the world, rail transit is a luxury for the few paid for by everyone. Commuter trains and subways may be necessary to keep Manhattan going, but that doesn't mean that everyone else in the nation should subsidize them. Outside of New York City, rail transit makes little economic sense.

The federal government should end its transit subsidies, and American cities should focus on more economically sound and consumer-driven approaches to easing congestion. Policymakers at all levels should work to revive private transit options for cities, and they should allow consumers to pursue their transportation choices in a neutral and competitive market environment. 
 

History of Urban Transit

Early urban transit ventures were privately financed. However, because many of these ventures used public rights-of-way, companies often had to obtain franchises from city councils. But other than rights-of-way, transit companies received no subsidies or other public support through the end of the 19th century.

The first popular public transit was the omnibus, a horse-drawn wagon with seats for passengers. New York City saw its first omnibus in 1827. Then came the horse-drawn railcar in the 1830s, which would be used in more than 500 American cities. In the same decade, the first steam-powered commuter trains started carrying suburban workers into Boston. The first elevated transit line was built in New York in 1871.

Electric streetcars arrived on the scene in the late 1880s. They were so much more efficient than previous forms of travel and would be adopted by more than 850 American cities and towns. Other innovations included interurban rail lines, electric-powered elevated rail lines, and heavy-rail subway lines, installed in New York City in 1904.

Until this point, urban transit was privately financed and unsubsidized. All this innovation to improve convenience and reduce costs came from private entrepreneurs. But soon after the turn of the century, governments began to intrude. Government-owned streetcar lines were opened in Bismarck, North Dakota, and Monroe, Louisiana. And New York City took over the previously private Staten Island Ferry.

Private transit companies faced several financial difficulties. Many streetcar lines were built by real-estate developers to attract people to their housing projects. A developer would subdivide land on the city fringe, build a streetcar line from the development to downtown, and sell lots and homes. The profits on the real-estate development paid for the capital cost of the streetcar line. Transit fares covered only the operating cost. That worked fine for a few decades; but when the time came to replace the streetcars, rails, and other equipment, the companies often lacked the capital.

One way to raise funds was to increase fares. But governments regulated the fares, and proposals to raise fares were regularly rejected by public utility commissions. This left many transit companies with aging streetcar fleets in precarious financial positions.

Progressive-era politicians saw public takeover of transit companies as a solution. San Francisco was the first major city to operate its own streetcars starting in 1912. New York City started operating and acquiring subway lines in 1932. In 1938, Chicago obtained the first federal grants to support construction of a publicly owned rail line.

In cities where transit remained private, electric power companies often worked to consolidate streetcar lines under one owner. That gave rise to concerns about monopoly power. In 1935 Congress ordered power companies to divest their transit operations. Since transit was already struggling due to the rise of the automobile and the Depression, this act put many companies on the brink of bankruptcy.

One solution was to convert streetcars to buses, which did not require as much infrastructure support. Of the more than 700 American cities served by streetcars in 1910, at least 230 either went out of business or converted to buses by the end of 1929. Another 300 converted during the 1930s and 100 more in the 1940s.4

Fifty American cities still had streetcars in 1949. By 1967, only Boston, Cleveland, New Orleans, Philadelphia, Pittsburgh, and San Francisco still had streetcars; and New York and Chicago were the only other cities that still had other forms of rail transit. The conversions from rail to buses were made for efficiency reasons, not monopolistic reasons, as often claimed.5

By the early 1960s, all of the rail transit systems except one had been taken over by public agencies, but the vast majority of bus systems were still private. That changed quickly when Congress promised to make capital grants available to public agencies—but not private companies—that operated or acquired transit systems. Within a decade, all but a handful of transit systems were taken over by tax-subsidized public agencies.

Congress did not pass the Urban Mass Transit Act of 1964 in order to provide mobility to low-income families who could not afford cars. Rather, Congress was reacting to proposals by various railroads to discontinue interstate commuter trains serving Boston, Chicago, New York, and Philadelphia.6 At the time, these four urban areas plus San Francisco had the only commuter trains in America. Urban leaders argued that the commuter trains were essential to maintain jobs in downtown areas.

The Urban Mass Transit Act was designed to provide federal support for interstate commuter trains. But politics quickly broadened that mission to providing federal support to mass transit in every state and metropolitan area. Over the decades, about $160 billion has been spent on federal rail subsidies, and the result has been a monument to the folly of federal intervention into a properly local and private activity.
 

Six Problems with Rail Transit

1. Cost

The most important thing to understand about rail transit is that it is very, very expensive. The Government Accountability Office has shown, for example, that buses can provide service as fast and frequently as light rail at a lower operating cost and for about two percent of the capital cost.7 Outside of a few very dense places such as Manhattan, Tokyo, and Hong Kong, there is nothing trains can do that buses cannot do faster, better, more flexibly, and for a lot less money.

The typical light-rail project being planned or built today costs $20 million per track mile, although one being planned in Seattle is expected to cost more than $100 million per mile.8 Heavy rail typically costs at least twice as much as light rail: An extension of the Washington Metrorail system is expected to cost $225 million per mile for example.9 Commuter-rail typically costs $5 to $10 million per mile.

Freeways typically cost much less than rail. The Fort Bend Tollway Authority recently completed a four-lane freeway on the outskirts of Houston, complete with interchanges and over- and underpasses, for $2.4 million per lane mile.10 The Colorado Department of Transportation recently widened Interstate 25 through the heart of Denver, which required numerous overpasses, at a cost of $19 million per lane mile.11 Counting urban and suburban areas together, the average cost is less than $10 million per lane mile.

Rail advocates claim that rail lines can move as many people as several freeway lanes, however capacity counts for much less than actual use. In 2007, the average track mile of light and commuter rail carried less than 15 percent as many passenger miles as the average freeway lane mile in urban areas with rail transit. Outside of New York, the average heavy rail mile carried only 70 percent as many passenger miles as the average urban freeway lane mile.12

In comparing rail and highway productivities, rail supporters often use a double standard: comparing full railcars with the average occupancy of commuter automobiles. In fact, like automobiles, the average transit vehicle carries far fewer people than its capacity. Most rail cars and buses carried less than one-sixth of their capacity in 2007.13 Even sport utility vehicles do better than that.

2. Cost Overruns

Rail transit projects are notorious for cost overruns. In a 2002 study, Danish planning professor Bent Flyvbjerg found that, after adjusting for inflation, the average North American rail project cost more than 40 percent more than the original approved cost, while highway projects were 8 percent over-budget, on average.14 Two studies of more recent rail projects found that their costs were also 40 percent over-budget, on average.15

Here are some recent examples of over-budget rail projects:

  • In 1998, Phoenix proposed to build a 13-mile light-rail line for $390 million, or $30 million per mile.16 Completed in 2008, the final cost of the 19.6-mile line was $1.41 billion, or $72 million per mile.17
  • In 2000, Charlotte, North Carolina, estimated that a light-rail line would cost $331 million.18 The final cost turned out to be $427 million.19
  • In 2004, the first 12-mile leg of the Dulles rail project in Virginia was projected to cost $1.5 billion.20 Today the projected cost has increased to almost $3.0 billion.21
  • In 2004, Denver's Regional Transit District persuaded voters to support a $4.7 billion rail transit system. The latest estimate is that this system will cost 68 percent more at $7.9 billion.22

While cost projections are not an exact science, Flyvbjerg believes that persistent underestimates of rail construction costs result from "strategic misrepresentation, that is, lying."23 Planners deliberately lowball estimates in order to gain project approval. Once the project is approved, they develop more realistic estimates, add expensive bells and whistles, and respond to political pressures to lengthen the originally proposed project.

Many of the original estimates for transit projects are made by consulting firms, who also expect to receive later contracts for engineering and construction. As such, these firms have an incentive to develop projections that will gain approval, both by underestimating the costs and overestimating the benefits.

In one example of strategic misrepresentation, Parsons Brinkerhoff (now known as PB) compared a proposal to bring rail transit to Madison, Wisconsin, with improvements to bus service. To its dismay, the company found that bus improvements alone attracted more riders than bus improvements combined with rail transit. Later, PB admitted that it crippled the bus alternative, making it appear that rail transit was needed to boost transit ridership.24 When the government agency that hired PB presented the results to the public, it never mentioned the bus alternative at all, making it appear that rail transit was the only way to attract people to transit.25

Despite the record of cost overruns, transit agencies often claim that they finish their project "on budget." For example, after adjusting for inflation, Denver's Southwest light-rail line cost 28 percent more than its original estimate.26 The city's Southeast light-rail line went 59 percent over its original estimate.27 Yet Denver's Regional Transit District insisted that both projects were "on budget," based on the deceptive notion that project costs matched the final budgeted amounts—not the earlier and lower estimates.28

3. Rehabilitation

Transit agencies generally go heavily into debt to fund rail projects by issuing long-term bonds. But the costs don't end when the bonds are paid off: rail lines must be completely replaced, rebuilt, or rehabilitated about every 30 years. Except for the right-of-way, everything—cars, tracks, roadbed, stations, electrical facilities—must be replaced or upgraded.

The first Washington, D.C., Metrorail line opened in 1976. In 2002, just 26 years later, the Washington Metropolitan Area Transportation Authority estimated that it needed $12.2 billion—roughly the cost of constructing the original system—to rehabilitate the system.29 It has not found any of this money, so the system suffers frequent breakdowns and service delays.30

Rail transit systems in Chicago, San Francisco, Boston, and New York also face fiscal crises. The Chicago Transit Authority is "on the verge of collapse" as it needs $16 billion to rehabilitate its tracks and trains.31 Similarly, the San Francisco BART system faces a $5.8 billion shortfall to replace worn-out equipment.32 Boston borrowed $5 billion to restore its rail lines and now more than a quarter of its operating budget goes to repay this debt, which is "crushing" the system.33

New York's Metropolitan Transportation Authority "is in deep doo-doo" because it doesn't have the money to rehabilitate its system.34 It is already spending about $2 billion per year repaying debts incurred for past rehabilitation efforts.35 It says it needs $30 billion for rehabilitation over the next 10 years, of which it has only $13 billion.36 As a result, it may need to cut subway, commuter rail, and bus service.37

Rehabiliating light-rail lines is also expensive. The first modern light-rail lines, including those in Buffalo, Portland, Sacramento, and San Diego, will reach their 30th birthdays in the next decade, and their rehabilitation will cost similar amounts. Few, if any, of these agencies know how they are going to finance this cost.

Such rehabilitation costs do not increase the capacities of transit systems and thus should be considered maintenance costs. But the Federal Transit Administration allows transit agencies to count rehabilitation as a capital cost. The significance is that when rail advocates claim, as they often do, that rail lines cost less to operate and maintain than buses, they are ignoring these long-term maintenance costs.

Many of the same agencies that cannot afford to maintain their existing systems are nonetheless embarking on expensive expansions. New York's MTA is spending $16.8 billion building an eight-mile Second Avenue Subway. Washington's Metro is spending $5.2 billion building a rail extension to Dulles airport. San Francisco's BART is preparing to spend more than $6 billion building a line to San Jose. Chicago is extending several of its commuter-rail lines.

This complete disconnect between planning and budgetary reality has become typical of rail-transit agencies. Rail transit fares do not come close to paying the operating costs, much less the costs of line rehabilitation or new rail construction. If transit agencies cannot afford to maintain their existing lines, it makes no sense for them to build new ones.

4. Ridership

To justify spending billions of taxpayer dollars on rail, advocates often claim that middle-class automobile owners won't ride a bus. In fact, transit ridership is more sensitive to frequency and speed than to whether the vehicles run on rubber tires or steel wheels. "When quantifiable service characteristics such as travel time and cost are equal," say researchers, "there is no evident preference for rail travel over bus."38

The real problem is what happens to overall transit system ridership when agencies face soaring costs and must choose between keeping the trains or buses running. Having built rail, many agencies feel compelled to cut more efficient bus service, which in turn causes overall transit ridership to stagnate or drop.

In the late 1970s, Atlanta began building a heavy-rail system. By 1985 it had 25 route miles and ridership had grown to 155 million trips per year. Since then, the Atlanta urban area population has doubled, rail miles have also doubled, yet ridership continues to hover around 155 million. In 2007, it reached 158 million. While rail ridership has grown, that growth has been at the expense of bus ridership.39

In the early 1980s, Los Angeles maintained low bus fares, and between 1982 and 1985 ridership grew by more than a third. Then it decided to build rail transit, which suffered huge cost overruns. In response, the Los Angeles Metropolitan Transportation Authority raised bus fares and cut back on service, leading to a 17 percent drop in bus ridership by 1995. The NAACP sued, arguing that the agency was cutting service to minority neighborhoods in order to finance rail lines to white middle-class neighborhoods. The court ordered the MTA to restore bus service, forcing it to curtail its rail plans.40 Today, bus ridership has rebounded and far exceeds its 1985, prerail level, while rail ridership stagnates.

When St. Louis opened its first light-rail line in 1993, it was hailed as a great success because system ridership, which had shrunk by nearly 40 percent in the previous decade, started growing again. But when St. Louis opened a second line in 2001, doubling the length of the rail system, rail ridership remained flat and bus ridership declined. By 2007, total system ridership was no greater than it had been in 1998.

As of 2003 about half of the urban areas with rail transit had ridership declines compared to the mid-1980s. The remaining areas enjoyed increases in ridership, but at rates slower than increases in driving and, in most cases, slower than the population growth.41

Many areas with bus-only transit systems did far better. From 1983 to 2003, ridership on bus transit systems in Austin, Charlotte, Houston, Las Vegas, Louisville, and Raleigh-Durham all grew faster than auto driving. The 2000 census revealed that the number of commuters taking transit to work in urban areas with rail transit declined overall, while the number in bus-only urban areas increased.42

5. Land Use

Buses are flexible and can easily be rerouted when travel patterns change. Rail lines take years to build and are much harder to rerout. While bus systems can respond to rider demand, rail systems must generate their own demand. This leads transit agencies to promote intrusive land-use regulations that mandate or subsidize high-density developments close to rail stations, so-called transit-oriented development.

Instead of customizing transit systems to serve American cities as they exist today, transit agencies want to rebuild the cities to suit the kind of transit service the agencies want to provide. There are many problems with this aspiration, not least of which is the fact that transit carries less than 5 percent of travel in all American urban areas except New York, and it seems absurd to design cities around such little-used transportation systems.

Another problem is that land-use policies have, at best, marginal effects on people's transportation choices. Transportation technologies do influence land uses: cities built before 1890, when most people walked for most of their travel, were much denser than cities built between 1890 and 1930, when streetcars were popular; those cities, in turn, were denser than cities built after World War II, when autos were dominant. But this process is not reversible: building cities to pre-auto or pre-streetcar designs will not lead people to significantly reduce their driving.

According to Robert Cervero, an enthusiast of transit-oriented development, such developments do increase transit ridership, but this is "due to residential self-selection—i.e., a life-style preference for transit-oriented living."43 In other words, people who prefer transit over driving choose to live in such areas, but that doesn't mean that the urban design has influenced their travel habits.

Also, the market for transit-oriented development is very limited: surveys suggest more than four out of five Americans would prefer a home with a yard to living near shops, transit, or jobs.44 Once that demand is met, cities like Portland and Denver have had to resort to huge subsidies to entice developers to build more high-density developments, and the evidence indicates that the people who live in those developments drive just as much as people elsewhere.

6. Capacity

Rail transit is often described as "high-capacity transit." Yet its capacity really isn't that high. Heavy-rail lines, such as subways, are the highest capacity form of transit. If people jam in tightly, the "crush capacity" of a heavy-rail car is about 180 people. An eight-car heavy-rail train can therefore carry about 1,440 people. If rail systems can manage to move one train every minute—and only a few American rail lines can support such traffic—the line can move 86,400 people per hour. This is where rail advocates are able to claim that a rail line can move as many people as several freeway lanes. The capacities of other forms of rail transit are much lower.

However, few places really need such high-capacity transit. People look at the freeway during rush hour and think, "If only we had a rail line, all those people could ride." But the reality is that all the people in those cars have different origins and destinations. They may all be in this freeway corridor now, but a rail line will only serve a tiny number of them because most do not both live and work near a rail station.

What cities really need is flexible-capacity transit: transit capable of moving large numbers of people where needed while also economically moving small numbers where demand is lower. Rail transit, with its very high fixed costs, cannot qualify. Rail-transit agencies try to provide flexible capacities by having buses feed into rail stations, but transit agencies lose riders every time they ask people to change vehicles.

Buses can provide flexible-capacity transit. They can run on city streets in the suburbs where demand is low, move to high-occupancy vehicle (HOV) or high-occupancy toll (HOT) lanes where demand is higher, and if demand warrants, use exclusive bus lanes. While the capacity of exclusive bus lanes may not be quite as high as heavy rail, buses, unlike the trains, can easily start from different origins and diverge to different destinations, allowing more people to make their transit journeys without transfers.

This means that light rail and commuter rail really make no sense anywhere. Cities that need low-, moderate-, or high-capacity transit can meet those needs with buses. Only areas that need ultra-high-capacity transit might need to consider heavy rail, and outside of New York City no place in the United States truly needs such high capacities.
 

Six Myths of Rail Transit

Rail transit is not cost-efficient and it generally fails to attract significantly more riders than improvements in bus service. Yet rail advocates have many other arguments for why cities should build rail transit systems. Here are six popular, but erroneous, reasons that are often given for building rail lines—six myths of rail transit.

1. Economic Development

Rail advocates say that rail transit stimulates economic development. They often point to a streetcar line built in downtown Portland, Oregon, that supposedly stimulated $1.5 billion worth of new development. In fact, much of that development was subsidized with hundreds of millions of dollars of tax-increment financing and other developer subsidies. It is not likely that the streetcar alone would have generated the developments without the subsidies.

Does any rail transit stimulate new development? In the mid-1990s, the Federal Transit Administration asked this question of Robert Cervero, who is a strong proponent of transit-oriented developments, and Samuel Seskin, who works for Parsons Brinkerhoff, the consulting firm that has had a hand in almost every major rail transit project since the first New York City subway was built. Despite their bias in favor of rail transit, the authors found that "urban rail transit investments rarely ‘create' new growth." At best, it may "redistribute growth that would have taken place without the investment."45

In other words, rail transit is at best a zero-sum game benefiting some property owners at the expense of others. The property owners who mainly benefit are those who own land downtown because most rail systems are hub-and-spoke systems that focus on downtown. That explains some of the political calculus behind rail: downtown property owners benefit a lot, so they lobby for rail. Other property owners each lose a little, so they have little incentive to lobby against it.

Many planners and city officials take for granted that anything that improves downtown is a good thing. But why is it so important to improve downtowns? Downtowns "are relics of a time past," says Joel Garreau in his book, Edge City.46 The conventional image of a city as a place with a high-density downtown surrounded by lower-density housing "is only one way to think of a city," adds Garreau. "In fact, it is only the nineteenth-century version."47 Before 1820, people did not build downtowns because they didn't have industries that concentrated jobs and they lacked the technology to build taller, denser structures. After 1920, the automobile, electrical power, and telephones made downtowns unnecessary.

2. People Won't Ride Buses

Rail advocates claim that buses won't entice middle-class auto drivers out of their cars but that rail can. In reality, improvements in bus service can attract as many new transit riders as rail construction—and at a far lower cost.

A recent survey found that the median income of Washington, D.C., Metrorail riders was 47 percent higher than Metrobus riders, and that 98 percent of rail riders owned an automobile compared with only 80 percent of bus riders.48 For those who want to get middle-class commuters out of their cars, this is a Pyrrhic victory, considering that the fossil-fuel-generated electricity used to power the Metrorail system emits more carbon dioxide (CO2) per passenger mile than the average SUV. Meanwhile bus riders face repeated service cuts so that the transit agency can keep the trains running.49

In the late 1990s, the San Francisco Bay Area Metropolitan Transportation Commission—which spends two-thirds of the region's transportation funds on transit systems that carry only four percent of the region's passenger travel—was considering where to invest.50 One possible project was an extension of BART trains to San Jose, a line so expensive that taxpayers would spend nearly $100 per trip. Another project was improved bus service in Richmond, a city with a heavy population of low-income minorities. Bus improvements, planners estimated, would cost just 75 cents per trip.51 The commission decided to support the rail line and not the bus improvements. In the commission's judgment, spending $100 to attract one high-tech worker onto a train was more important than spending the $100 to attract 133 low-income workers onto buses.

A factor behind such decisions is that middle-class workers are more likely to vote than lower-income workers. Getting those voters to support the idea of transit as a daily necessity—rather than something used only by those who can't afford cars—is part of the rail agenda. Thus, the real goal is not to get a large number of people out of their cars. Instead, the goal seems to be to get enough people out of their cars to create some middle-class transit dependency to generate support for increased transit funding.

3. Rails Avoid Congestion

Rail advocates say that an advantage of rail cars is that they aren't slowed by congestion, as are cars and buses. But that begs the question why a small number of people deserve a heavily subsidized transit system allowing them to avoid congestion, while everyone else who is paying the subsidies has to sit in traffic.

More importantly, the premise that we need rail because buses can't avoid congestion is incorrect. Most major urban freeway systems have high-occupancy vehicle (HOV) lanes or high-occupancy toll (HOT) lanes. HOT lane tolls are adjusted to ensure that the lanes don't become congested. An urban area with a complete network of HOV or HOT lanes as a part of every freeway could allow buses to avoid congestion throughout the region.

Such HOV or HOT lanes cost less than rail lines, and the congestion relief they provide benefits everyone. Bus riders benefit because buses traveling at freeway speeds go faster than light rail (which averages about 20 miles per hour) or heavy-rail trains (which generally average no more than 40 miles per hour). The car drivers using HOV or HOT lanes benefit because they also avoid congestion. People who don't use the lanes also benefit: HOT lanes built parallel to a freeway in southern California draw a third of the traffic off the freeway.

In general, rail transit costs more to build and operate and does less to relieve congestion than new HOV or HOT lanes with bus rapid transit. With a well-designed highway system, buses can not only avoid congestion as well as trains, they can do so at a far lower cost and be put into service almost immediately instead of after a decade of planning and construction.

4. Political Equity

Rail advocates sometimes say, "Let's build one line and see how it works." But then the construction of one line often creates momentum for additional lines. One reason is that every urban community wants a share of federal rail dollars, no matter how poorly rail might actually serve their community. The federal grant-in-aid system creates major distortions in urban transportation choices—cities are steered into less efficient transit choices.

Consider the transportation improvements in a corridor between downtown Denver and Denver International Airport in the 1990s.52 A consultant study showed that rail transit cost more to build and operate and less to relieve congestion than new freeway or HOV lanes. Nonetheless, planners picked rail transit.

Suburbs in the Denver area agreed to support the Regional Transit District's multibillion-dollar rail plan if all the rail lines were built at once. Suburban officials realized that the plan would probably suffer major cost overruns (as proved to be the case) and that whatever line was last on the schedule would probably never be built. In response to the cost overruns, the transit agency proposed to build just four of the six planned lines—a proposal that was naturally rejected by officials from the suburbs whose lines would be left out.53

Rail advocates have applied the equity argument to neighborhoods as well as cities. San Francisco wants to spend $1.4 billion on a 1.7-mile transit tunnel as a part of a project to extend light rail to the Bayshore neighborhood.54 According to the Federal Transit Administration, Bayshore transit ridership is already very high, but a main reason for building this line is "to achieve a goal of equity with other communities currently served by rail."55 By the Federal Transit Administration's reasoning, if one neighborhood is served by an unaffordable transit line, equity demands that every other neighborhood get equally unaffordable service.

5. It Works in Europe

American tourists visit Europe and ride the London subway, the Paris metro, or trams in Italy, and come home wishing the United States had more such transit systems. However, the United States isn't Europe: our population densities are lower, and our incomes are higher, so fewer people are likely to ride transit even in dense areas.

Also note that rail transit in Europe isn't necessarily efficient. As of 2007, at least 150 European urban areas had some form of rail transit, compared with 30 in the United States.56 Europe spends several times more money subsidizing those rail lines as the United States spends on transit.57

The European rail lines may be convenient for tourists, but the average European rarely uses them. In 2004, the average American traveled 87 miles on rail transit; the average European just 101 miles. This difference hardly commends Europe as an example of successful rail transit. Moreover, the share of European travel on rail transit declined from 1.4 percent in 1980 to 1.1 percent in 2000. Meanwhile, the share of European travel using automobiles increased from 76.4 to 78.3 percent.59

6. Protecting the Environment

Many people take it for granted that rail transit is good for the environment. The reality is that rail transit uses about as much energy and emits about as much pollution, per passenger mile, as automobiles. To the extent that rail transit might save any energy at all, the financial cost of getting a few people to ride trains and drive less is huge.

People who sincerely want to save energy and reduce pollution should focus on making automobiles more environmentally friendly, not on trying to get people to ride rail transit. Charles Lave called this the "Law of Large Proportions," meaning "the biggest components matter most."60 In other words, Americans travel 60 times as many passenger miles in urban areas by automobile as by transit, so a small investment in reducing the environmental effects of autos will go much further than a large investment in transit.
 

Private Transit Solutions

The first step toward reform is to remove federal subsidies and related regulations from the transit equation. Federal intervention creates all kinds of perverse incentives for state and local governments. These include the following:

  • Cities are encouraged to build very inefficient rail lines because more than half of all federal funds are dedicated to rail transit.
  • Transit agencies are encouraged to find the most expensive transit solutions because rail construction funds are an open bucket—first-come, first-served.
  • Innovative transit solutions are bypassed and high costs are guaranteed because of the requirement that transit agencies obtain the approval of their unions to be eligible for federal grants.
  • Local transit agencies have strong incentives to claim success with their projects no matter how badly they fail because of the requirement that agencies must refund federal grants if projects are cancelled.
  • Federal rules impose a transit planning process that is biased in favor of higher-cost transit projects, and the process allows agencies to systematically low-ball cost estimates and overstate potential ridership.
  • Federal subsidies have been mainly directed to capital costs of local transit, not operating costs. That has led to a host of distortions, such as agencies favoring rail over buses and favoring larger buses when smaller ones would do the job.
  • Many federal regulations distort the flow of funding to the most efficient solutions, such as rules that tie the distribution of transportation funds to air quality planning.

These factors and others have promoted less efficient transportation solutions than would have likely been employed without federal intervention. I have discussed these problems elsewhere at length.61

With the federal government out of the picture, state and local governments would need to rethink their own urban transit financing. One problem is that the average American transit agency gets only a third of its operating funds and none of its capital funds from fares. This means that transit officials are less interested in increasing transit ridership than they are in persuading politicians and taxpayers to give them more money. Increased ridership is actually a burden on transit systems: even though transit vehicles are, on average, only one-sixth full, they tend to be fullest during rush hour, when new riders are most likely to use transit.

Today's government rail transit systems make no financial or transportation sense. They only work because few people use them and everyone else subsidizes them. Because rail transit costs at least four times as much, per passenger mile, as driving, if everyone rode today's rail systems instead of automobiles, cities would go bankrupt trying to keep the systems running.

Yet urban transit does not have to be expensive, and it does not even have to be subsidized. The United States has several completely unsubsidized transit systems that work very well. One is the Atlantic City Jitney Association, whose members own identical 13-passenger buses. Each bus is operated by its owner on routes scheduled by the association. Rides are $1.50 each and cover all major attractions in the city. Unlike most publicly owned transit systems, the jitneys operate 24 hours a day, 7 days a week, and receive absolutely no subsidies from any government agency.62 Such jitney service is illegal in most other American cities because it would compete against the government's monopoly transit agency.

Another unsubsidized transit system is the públicos, or public cars, of San Juan, Puerto Rico. Públicos are independently owned and operated buses that typically seat 17 passengers. At least six different companies operate públicos and they provide both urban and intercity service. Fares vary depending on the length of the ride, but in 2007 they averaged less than a dollar. Although públicos compete against a public bus system and a recently built heavy-rail line (whose cost rose from a projected $1.0 billion to $2.2 billion), the públicos carry more riders each year than the public buses and trains combined.63

A third unsubsidized transit system is the NY Waterway ferries, which connect multiple points in New Jersey and Manhattan. Founded in 1986 by Arthur Imperatore, NY Waterway offers a service that none of the many government transit agencies in the metropolitan area thought to provide.64 Passengers arriving in New York City can take NY Waterway buses to and from various points in Manhattan at no extra charge. Although the company accepted a federal subsidy in 2001 to temporarily replace subway service between New Jersey and the World Trade Center after 9/11, it is otherwise funded entirely out of fares.65 The company carried 4.8 million passengers in 2007, collecting $33 million in revenues against $21 million in operating expenses.66

Public transit agencies encourage people to believe that if their large subsidies disappeared, people without cars would lack any mobility. In fact, private forms of transit would quickly spring up to take the place of government transit. Such private transit would, in many ways, be superior to the government transit. It would be more likely to offer door-to-door service, operate during more hours of the day, and provide more limited or nonstop services to popular destinations.

American taxpayers can no longer afford costly and inefficient government transit systems, particularly rail transit systems. Federal subsidies ought to be eliminated and local governments should open up transit to private and entrepreneurial solutions to relieving traffic congestion.


12007 Public Transportation Fact Book (Washington: American Public Transportation Association, 2007), p. 6.

2Budget of the U.S. Government, Fiscal Year 2011, Analytical Perspectives, Table 33-1.

3 The stimulus bill was the American Recovery and Reinvestment Act.

4 "List of Streetcar Systems in the United States," Wikipedia, tinyurl.com/7za8zb. Accessed February 17, 2010.

5 See Randal O'Toole, Gridlock (Washington: Cato Institute, 2009), p. 137.

6 George M. Smerk, The Federal Role in Urban Mass Transportation (Bloomington, IN: Indiana University, 1991), pp. 60–61.

7 Ruben N. Lubowski, et al., Major Uses of Land in the United States, 2002 (Washington: Department of Agriculture, 2006), p. 5.

8Annual Report on Funding Recommendations: New Starts, Small Starts, Alternative Transportation in Parks and Public Lands (Washington: Federal Transit Administration, 2008), Appendix A.

8 "Dulles Corridor Metrorail Project—Extension to Wiehle Avenue" (Washington: Federal Transit Administration, 2007), p. 1, tinyurl.com/7b7n6z. And see Amy Gardner, "Metro to Dulles Gets Formal Federal Backing," Washington Post, March 11, 2009.

10 "Fort Bend Parkway Toll Road," Fort Bend County Toll Road Authority, 2008, tinyurl.com/5t9znq.

11 "Metro Denver's Multi-Modal T-REX Takes Last Step," Metro Denver EDC, 2006, tinyurl.com/3syrll.

12 Passenger miles per track mile calculated from data in 2007 National Transit Database (Washington: Federal Transit Administration, 2008). Passenger miles per freeway lane mile calculated from data in U.S. Department of Transportation, Highway Statistics 2007, Table HM-72. Freeway passenger miles assumed to be 1.6 times freeway vehicle miles.

13 Calculated from data in 2007 National Transit Database (Washington: Federal Transit Administration, 2008).

14 Bent Flyvbjerg, Mette Skamris Holm, and Søren Buhl, "Underestimating Costs in Public Works Projects: Error or Lie?" Journal of the American Planning Association 68, no. 3 (2002): 285.

15 Nasiru A. Dantata, Ali Touran, and Donald C. Schneck, Trends in U.S. Rail Transit Project Cost Overrun, Presented to the Transportation Research Board, 2006 Annual Meeting, Table 2. And see The Predicted and Actual Impacts of New Starts Projects—2007 (Washington: Federal Transit Administration, 2008), p. 11.

16 "Central Phoenix/East Valley Light Rail" (Washington: Federal Transit Administration, 1998), tinyurl.com/837vda.

17 "Central Phoenix/East Valley Light Rail" (Washington: Federal Transit Administration, 2004), p. 1, tinyurl.com/9vsa2o.

18 "South Corridor LRT" (Washington: Federal Transit Administration, 2000), tinyurl.com/7rcxwq.

19 "South Corridor LRT" (Washington: Federal Transit Administration, 2005), tinyurl.com/8x6dwd.

20 "Dulles Corridor Metrorail Project—Extension to Wiehle Avenue" (Washington: Federal Transit Administration, 2004), p. 1, tinyurl.com/798bx5.

21 "Dulles Corridor Metrorail Project—Extension to Wiehle Avenue" (Washington: Federal Transit Administration, 2007), p. 1, tinyurl.com/7b7n6z.

22 "Summary of Changes to FasTracks Program: Attachment 1" (Denver, CO: Regional Transportation District, 2008), p. 2, tinyurl.com/4kodgc.

23 Bent Flyvbjerg, Mette Skamris Holm, and Søren Buhl, "Underestimating Costs in Public Works Projects: Error or Lie?" Journal of the American Planning Association 68, no. 3 (2002).

24 Parsons Brinckerhoff, Transportation Alternatives Analysis for the Dane County/Greater Madison Metropolitan Area (Madison, WI: Transport 2020, 2002), pp. 7-6, 10-2, and 10-22.

25 Transport 2020, Transport 2020 Oversight Advisory Committee (OAC) Summary Report (Madison, WI: Transport 2020, 2002), p. 21; Project Fact Book (Denver, CO: Regional Transit District, 2006), p. 14.

26 Booz Allen Hamilton, Inc., Managing Capital Costs of Major Federally Funded Public Transportation Projects (Washington: Transportation Research Board, 2005), p. 55.

27Final Report: Southeast Corridor Major Investment Study (Denver, CO: Colorado Department of Transportation, 1997), p. 4-24.

28 "A Message from RTD General Manager, Cal Marsella" (Denver, CO: Regional Transit District, 2005).

29 "America's Transit System Stands at the Precipice of a Fiscal and Service Crisis" (Washington: Washington Metropolitan Area Transit Authority, 2004), p. 1.

30 Lyndsey Layton and Jo Becker, "Efforts to Repair Aging System Compound Metro's Problems," Washington Post, June 5, 2005. And see Lena H. Sun and Joe Holley, "Aging Equipment Blamed in Metro Incidents," Washington Post, August 28, 2007.

31 "Chicago Rail System on Verge of Collapse," Engineering News Record, November 21, 2007.

32 Denis Cuff, "BART Gets Rusty: Aging System Lacks Billions for Infrastructure," Contra Costa Times, September 28, 2007.

33 Mac Daniel, "Group Seeks Debt Relief for the T," Boston Globe, January 9, 2007.

34 Em Whitney, "Transportation Advocates Agree: The M.T.A. Is in Deep Doo-Doo," New York Observer, June 27, 2008.

35MTA 2007 Adopted Budget (New York: Metropolitan Transportation Authority, 2007), p. II-2.

36 Eliot Brown, "Paterson Launches Panel to Find M.T.A. Much-Needed Money," New York Observer, June 10, 2008.

37 "Deficits May Force Cuts in NYC Subway, Bus, Rail," WABC News, September 23, 2008.

38 Moshe Ben-Akiva and Takayuki Morikawa, "Comparing Ridership Attraction of Rail and Bus," Transport Policy Journal 9, no. 2 (2002).

39 All ridership numbers are from the National Transit Database (Washington: Federal Transit Administration, various years).

40 Labor/Community Strategy Center, "Bus Riders Union," www.busridersunion.org.

41 Randal O'Toole, "Rail Disasters 2005" (Bandon, OR: American Dream Coalition, 2005), p. 6.

42 Randal O'Toole, "Great Rail Disasters" (Golden, CO: Independence Institute, 2004), p. 7.

43 Robert Cervero, "Transit Oriented Development's Ridership Bonus: A Product of Self-Selection and Public Policies," University of California Transportation Center, Berkeley, 2006, p. 1.

44 National Family Opinion, "Consumers Survey Conducted by NAR and NAHB," National Association of Realtors, 2002, p. 6.

45 Robert Cervero and Samuel Seskin, An Evaluation of the Relationship between Transit and Urban Form (Washington: Transportation Research Board, 1995), p. 3.

46 Joel Garreau, Edge City: Life on the New Frontier (New York: Doubleday, 1991), p. 59.

47 Joel Garreau, Edge City: Life on the New Frontier (New York: Doubleday, 1991), p. 25.

48 Kytja Weir, "Survey: Metrorail Users More Affluent, Better Educated," Washington Examiner, May 17, 2009.

49 Kytja Weir, "Area Bus Riders Face Service Cuts," Washington Examiner, March 31, 2009.

50 Metropolitan Transportation Commission, Final Transportation 2030 Plan (Oakland, CA: MTC, 2005), p. 35.

51 Bob Egelko, "Inequity in Funding Discriminates against AC Transit Riders, Plaintiffs Claim in Suit," San Francisco Chronicle, April 20, 2005, p. B-1.

52Kimley-Horn & Associates, East Corridor Major Investment Study Final Report (Denver, CO: DRCOG, 1997), pp. 37–39.

53 "FasTracks Annual Program Evaluation Summary: 2008" (Denver, CO: Regional Transporation District, 2008), p. 3.

54 "Central Subway" (Washington: Federal Transit Administration, 2006), p. 1.

55 "Bayshore Corridor" (Washington: Federal Transit Administration, 1996).

56 Randal O'Toole, Gridlock (Washington: Cato Institute, 2010), p. 77.

57 Randal O'Toole, Gridlock (Washington: Cato Institute, 2010), p. 77.

58 Randal O'Toole, Gridlock (Washington: Cato Institute, 2010), p. 77.

59Key Facts and Figures about the European Union (Brussels: EU, 2004), p. 52.

60 Randal O'Toole, Gridlock (Washington: Cato Institute, 2010), p. 78.

61 Randal O'Toole, "A Desire Named Streetcar," Cato Institute Policy Analysis no. 559, January 5, 2006.

62 "We Keep Atlantic City Moving," Atlantic City Jitney Association, jitneys.net.

632007 National Transit Database (Washington: Federal Transit Administration, 2008).

64 N. R. Kleinfield, "Trucker Turned Builder: Arthur E. Imperatore; Creating Shangri-La on the Hudson," New York Times, January 4, 1987.

65 Sascha Brodsky, "Many Routes to Ferry King's Success," Downtown Express, July 17, 2002.

66 "NY Waterway Profile" (Washington: Federal Transit Administration, 2008), tinyurl.com/cp8hco.

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