Cleveland Taxpayers In For Rocky Ride on Waterfront Rail Project
Cleveland taxpayers are in for the ride of their lives with the Cleveland RTA’s newest rail project. The local RTA is running full-steam ahead with the Waterfront Line, an extension of the existing rail system that will cost at least $47.5 million. The RTA has even forgone $20 million in federal funding in order to put the plan on the fast-track toward completion. But, if the evidence from other cities is any indication, Cleveland’s ride will be rocked with disappointment, frustration, and higher taxes.
The record of both the cost-effectiveness and the revenue raising potential of rail systems is notoriously poor. Advocates of rail-projects routinely overestimate ridership by 30 percent to 50 percent, translating into much lower revenues than expected. In 1988, the most recent year data is available, Buffalo’s light rail system covered only 29 percent of its costs, Pittsburgh covered only 22 percent of its costs, and Sacramento’s light rail system covered only 19 percent of its costs. Since ridership levels tend to be very sensitive to even small changes in fares and service levels, the likelihood these systems will be able to raise taxes to recoup their costs is slim.
The result has been rail systems with much higher costs per rider than projected. Pittsburgh’s cost per rider was 33.4 percent higher than its projected cost while Buffalo’s system costs were 845 percent higher than initial projected costs. In fact, in a survey of eight rail systems conducted for the U.S. Department of Transportation, all except one (Atlanta) found that actual costs exceeded projected costs by at least double their initial projections. One U.S. Department of Transportation economist found that costs per rider were 5.4 times greater than the original projections.
Although the State of Ohio has committed to underwriting a substantial portion of the Greater Cleveland Gateway Project, which includes the Waterfront rail line, Clevelanders will be responsible for maintaining and subsidizing its continuing operation. Experience from other cities indicates that these subsidies may range from about one third to one half of the costs of operating the system.
The purpose of the Waterfront Line is to connect many of Cleveland’s attractions: Gateway Center, Tower City Center, the Flats, North Coast Harbor, and the Rock and Roll Hall of Fame. Given the potential fiscal hazards of a rail system, is there a cheaper, more cost effective, equally viable alternative? If the purpose is to provide fast, accessible transportation for Clevelanders and tourists, research on transportation concludes with an emphatic “YES.”
One alternative would be a bus or shuttle service similar to the ones run by airports, hotels, and rental car agencies. A study by the World Bank found bus systems were far and away more cost effective than rail systems. While surface rapid rail systems cost anywhere from 11 cents to 16 cents per passenger mile to operate (13-21 cents for elevated trains), bus transportation costs only 2 to 5 cents per passenger mile. In a recent analysis of transportation alternatives in the Denver metropolitan area, bus and other alternatives were ten times less expensive than rail alternatives.
Carrying from 8 to 15 passengers, these shuttle-type services have already become widely used as a cheap comfortable means of alternative transportation. Unlike rail systems that follow fixed routes regardless of the demand for their services, shuttle routes can be changed if other sites become popular or current waterfront line sites fail to meet expectations. Additionally, shuttle services provide a potentially significant source of employment for Cleveland residents since start-up and maintenance costs require minimum investments.
Some have argued recently that the benefits of the transit system will be substantial for the Cleveland business community. If this were true, the rail transit system appears to be an excellent opportunity for the private sector, especially for those establishments such as Tower City Center that will defiantly benefit from the project. Indeed, if this were the case, a prudent and responsible strategy by local officials would be to encourage the establishment of a private rail transit company to raise the capital and operate the system independently of the current RTA system, minimizing taxpayer exposure if the rail line is a bust.
Samuel R. Staley, Ph.D. is a senior fellow at the Buckeye Institute and director of Urban and Land Use Policy at Reason Foundation in Los Angeles. An Ohio native and resident, he is co-author of the forthcoming book Mobility First: A New Vision for Transportation in a Globally Competitive Twenty-first Century (Rowman & Littlefield) and co-author of The Road More Traveled: Why the Congestion Crisis Matters More Than You Think, and What We Can Do About It (Rowman & Littlefield, 2006).
