Tag: rail transit

Norfolk Light-Rail Scandal

Another city has discovered that light rail is not the road to utopia. In 2007, Norfolk, Virginia decided to revitalize its downtown by building a rail transit line. That line is now 45 percent over budget and its opening has been delayed by more than 16 months.

When Flickr user DearEdward took this construction photo in July, 2008, Norfolk officials were promising to open the light-rail line in December, 2009 at a cost of $232 million. Now the cost has grown to $338 million and the opening delayed to late in 2011.

A 45-percent cost overrun is about average for rail transit construction, but it has hit Norfolk particularly hard. In 2007, the Federal Transit Administration agreed to fund 72 percent of the then-projected $232 million cost, with the Commonwealth of Virginia and city of Norfolk each funding about half the remainder. Since the feds did not agree to cover any of the cost overruns, the overruns represent a near-tripling of the costs to state and city taxpayers.

Furious about the unexpected costs and delays., the Hampton Roads Transit board (which consists of city councilors from the cities the agency serves) forced the agency’s general manager to retire. A month ago, a state audit found that the Norfolk city manager and transit planners knew about the cost overrun long before they bothered to tell the city. As a result, both the city manager and the agency’s agency’s head planner resigned this week.

On top of cost overruns are construction delays. Originally scheduled to open to the public in December 2009, opening was delayed until May 2011. But now the transit agency admits it won’t even meet that date and can’t say when it will open.

Meanwhile, far from becoming a place “where people can work, shop, eat, and play,” Norfolk’s downtown now features “hundreds of empty condos, apartments, and storefronts.” The latest news is that a major supermarket is closing after a mere three years in business. While the truth is that the relative handful of people who are expected to ride the light-rail line are not enough to revitalize any downtown, lengthy construction delays certainly don’t help.

The best thing Norfolk might do now is to abandon the light-rail line and dedicate the $10 million or so that it will cost to subsidize rail operations to improving bus service in the city and its surroundings. Unfortunately, doing so means that it would have to refund the federal government the $168 million that it contributed to the line. As a result, city taxpayers will have to throw good money after bad by funding tens of millions in operating subsidies for the next several decades.

FTA Chief: Paint Is Cheaper Than Trains

In March, Cato published my review of every rail transit system in America (as of 2008), showing that in nearly every case buses would have been more cost-effective at moving people. This same view was expressed last week by a surprising source: Peter Rogoff, the Obama administration’s appointee in charge of the Federal Transit Administration (FTA).

Appropriately, Rogoff spoke before the Federal Reserve Bank of Boston, whose transit system, he pointed out, is in a “grim” state. Nationwide, he noted, America’s transit industry suffers from $78 billion worth of deferred maintenance – most of which is due to rail transit lines that cities cannot afford to keep in shape. Rogoff was disturbed that cities were asking for federal grants to build more rail lines when they can’t keep the existing trains in a state of good repair.

Rogoff says he has been telling transit managers, “if you can’t afford to operate the system you have, why does it make sense for us to partner in your expansion?” Cities that build “shiny new rails now … need to be mindful of the costs they are teeing up for future generations.”

“Let’s start with honesty,” he said: “Paint is cheap, rails systems are extremely expensive.” He suggested that, instead of expensive trains, many cities can attract just as many riders onto transit by painting buses on specific routes in distinctive colors (as Boulder, CO has done).

Part of the problem, Rogoff knows, is that Congress has given cities incentives to build high-cost transit projects. To address this issue, the last transportation bill, in 2005, included a section requiring the Federal Transit Administration to evaluate the incentives created by federal funding.

Unfortunately, the FTA dropped the ball: the resulting report said nothing about existing incentives and addressed only the question of whether new incentives could be created to encourage agencies to bring their properties up to a state of good repair. While that is a laudable goal, it is an input, not an output.

According to historic data published by the American Public Transportation Association, the productivity of public transit – outputs per unit of input – has declined dramatically since the federal government began funding transit in 1964. From 1964 through 2008, the inflation-adjusted cost of operating transit increased by more than 360 percent, while transit ridership grew by a mere 24 percent and fares by 62 percent.

Ultimately, transit should be privatized, but in the meantime Congress or the administration can adopt a race-to-the-top program similar to the one the administration is using to improve education. Rogoff should direct his agency to rewrite its incentive report before Congress takes up transportation again in 2011.

Tuesday Links

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Wednesday Links

  • Idea of the day: Repeal the 16th Amendment, which  gives Congress the power to lay and collect taxes. Replace it with an amendment that requires each state to remit to the federal government a certain percent of its tax revenue.
  • Economist Richard Rahn on the necessity of failure in the market: “When government becomes a player and tries to prevent the failure of market participants, its decisions are almost invariably corrupted by the political process.”
  • Read up on Goodwin Liu, Obama’s nominee for a seat on the 9th Circuit Court of Appeals: “Liu’s confirmation would compromise the judiciary’s check on legislative overreach and push the courts not only to ratify such constitutional abominations as the individual health insurance mandate but to establish socialized health care as a legal mandate itself.”
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