Bacon's Rebellion

Democracy Thrives in Sunlight

Bristol to Washington: Only $600 a Ticket

—

by

James A. Bacon
in

I love riding trains. I envy the French and the Japanese for their high-speed marvels. If the United States had a system of high-speed trains that could whisk me to different cities, I would take them over cars and airplanes any day. But I don’t think we’ll ever see such trains for a very simple reason: They’re just too darned expensive.

A recent report to the General Assembly provides rough cost figures for the TransDominion Express, a proposed train that would run from Bristol through Richmond to Washington, D.C. The Virginia Department of Rail and Public Transportation periodically updates the General Assembly on the estimated cost of such a project.

According to the latest update:

  • Up-front capital costs (in 2010 dollars) would be roughly $206 million.
  • Annual operating costs for full service would run $19 million (in 2010 dollars).
  • The train would attract between 14,000 to 58,000 riders annually.
  • Revenue is projected to be between $0.4 million and $1.8 million annually in 2010 dollars. A subsidy of between $17.2 and $18.6 million would be required.

Do the math: The subsidy for just operating the train would amount to roughly $600 per rider. And that doesn’t include the roughly $7,000-per-rider capital cost of the project. I don’t think so.

Hopefully, the TransDominion Express is not typical. The economics of a high-speed train serving the densely populated northeast corridor (Richmond to Boston) might look a lot better. Further, as air travel becomes increasingly chaotic and unpredictable, more people may opt for trains. But the costs and institutional barriers remain formidable.

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41 responses to “Bristol to Washington: Only $600 a Ticket”

  1. Groveton Avatar
    Groveton

    I am struggling with the rider and revenue numbers. Let’s look at the ranges:

    Riders: 14,000 to 58,000 annually.

    Revenues: $0.4M to $1.8M annually.

    Low end:

    $400,000/14,000 = $28.57 per rider

    High end:

    $1,800,000/58,000 = $31.03 per rider

    If I have the math right – those are pretty cheap train tickets if people are going from Bristol to Richmond or Richmond to Washington.

    I get 98 miles from Richmond to Washington, DC

    http://www.ersys.com/usa/51/5167000/distance.htm

    Let’s call it 100 to make things easy.

    I believe the standard “all in charge” per mile for a car is 43 cents.

    That’s $43 to get to/from Richmond/Washington by car.

    And $30 by train?

    Now wonder the subsidies are too big. The prices are too low.

    Of course, getting to no subsidies is another matter altogether.

    Let’s forget the capital costs for the sake of simplicity.

    And let’s use the high end of ridership – 58,000:

    $19,000,000 / 58,000 = $327.58 per rider.

    Assuming that a “rider” is a one way ticket – that’s a lot of money.

  2. Larry Gross Avatar
    Larry Gross

    nifty analysis Groveton!

    what is different from us and the Japanese/Europeans?

    Are our costs higher than theirs for some reason?

    why? why not?

    If we compared the passenger fares for a similar distance trip .. in Europe/Japan how would it compare?

    I’m trying to understand why it is not “too expensive” for Europe/Japan but is IS too expensive for us?

    And another question –

    what if we charged about what the Europeans/Japanese charged for a simliar distance trip.. how would the number of riders compare?

  3. Anonymous Avatar
    Anonymous

    The problem with Jim Bacon’s comparison on the costs of rail, he leaves out the costs of any other form of transport. How many billions has it taken to erect the Interstate highway system? How much loca, state and federal money has gone into building runways and traffic ocntrol systems. If you wanted to bother, you could look up the figures and do the math, too.

  4. Anonymous Avatar
    Anonymous

    This study makes no sense. Look at the ridership numbers of 14000-58000 a year. That equates to 38-159 passengers per day. The study indicates 2 round trips so you’re really looking at 10-40 passengers each way. That equates to less than one passenger car which I’m sure the capital and operating costs don’t match up with.

    Whoever wrote this study is either incompentent, lazy, or has another agenda. If we want to look at high speed rail as an alternative we need real projected numbers that show time saved and how many riders those time savings could attract at prices similar to car or bus travel.

    ZS

  5. Anonymous Avatar
    Anonymous

    I think 43 cents is too low for cars, that is what the government will pay for operating costs. The all up cost is more like $0.85, I think.

    When I was working on my short haul airline plan we figured the cost of a ticket at about $0.85 cents per mile, and for places like Richmond we assumed that the competition was the airport shuttle which was around a dollar a mile. Prices would be higher now due to fuel costs.

    It is shorter distance by air so I think we estimated a ticket from Richmond at $60. Time in the air was only 35 minutes, 55 minutes door to door with service twice every hour from 6:00 Until 10:00 and 4:00 until 8:00. I think we estimated 6000 to 10,000 passengers for the Richmond market.

    That ticket price includes all the capital costs, service charges for using the airport, etc.

    Or, you can take the bus which takes 2.5 hours and costs only $12.00, but you have to leave at 7:00 AM.

    We were able to secure funding for all the capital costs, secured by the value of the airplanes, and we had venture capital on board for part of the start up expenses, when 911 occured, plus we thought we could get federal loan guarantees throgh the rural development program.

    The regulatory requirements for airlines basically mean that you have to start the (skeleton) airline and operate it with no passengers for 6 months for test flights, training, inspection etc. And after that, you are constrained as to how fast you are allowed to grow, which is realistic since changes always incur risk.

    We were seeking a subsidy to get us through that period of time and six months of start up to develop the market. After that, we would either succeed on our own or fail.

    The state basically said, that’s a really good businees plan, we like it, let us know when you are ready to start. Considering what happened after 911, we were lucky.

    Our basic plan looked like the airport parking shuttle buses, except our satellite parking lots would have been at the thirty or so underused regional airports. With our small planes, you would go through security there at the regional airport, with a handful of others, and be deplaned at one of the three major airports alread inside the security zone. The flight time for most of these trips was hardly longer than the wait for a parking lot shuttle at the major airports.

    But, all of ths goes to show what the problem is. Ideally and conceptually trains should be cheaper than airplanes or cars, but it doesn’t work out that way.

    Trains are massive heavy equipment with huge capital costs, and they need a dedicated guideway which is also capital intensive. And that guideway needs to be pretty flat, so a lot of grading is involved. They need inpectors and operators and conductors.

    Once you consider the tons of steel and hundreds of tons of gravel, and millions of railroad ties, the net environmental costs of trains don’t look so hot. And this is reflected in the total cash costs you mention. Cash money is a pretty good proxy for the cost of resources and energy, and therefore environmental costs.

    Even if their theoretical operating costs per seat mile are low, you don’t fill all those seats so the cost per passenger mile is high. It only works if the trains have a pretty high load ratio.

    You could plan on smaller trains to get the load ratio up, but it doesn’t save you much money, so you pretty much have to assume wildly optimistic head counts to get the thing off the ground. Then, when the heads don’t materialize, well you can’t walk away from all that infrastructure without it being a total waste, so subsidies look alike a better alternative.

    Cars, for all their problems, share their guideway with trucks and busses. Cars provide their own operators, along with their own individual capital and operating costs. In addition, car owners provide a substantial amount of the capital costs for roadways. Despite all the bad things said about them, the true fact (much as we might dilike it) is that cars pay more of their full capital, operating, and social costs trains, and they have a better schedule, except during rush hour. The guideway network for cars offers far more destinations than trains can accomodate, and the guideway for cars is (partly) necessary anyway for emergency vehicles, freight, etc.

    Airplanes guzzle fuel at a tremendous rate, but they carry a lot of passengers at high speed, so the cost per passenger mile is low. Their enroute infrastructure is mostly communications, and physical infrastructure is at the terminal points only. Unlike a train, if a market does not work out, you can redeploy without ripping up track.

    I like trains, I hope we can figure out how to make them work. I suspect, that we will eventually get to the point of reconfigurable, rubber tire trains, which consist of a bunch of “smart cars” automatically linking and unlinking, not unlike EMR’s PRT.

    Such a plan will require a whole new level of cooperative, on the fly planning, in such a way that each vehicle benefits and the whole system benefits even more.

    But, if some vehicles insists that no other vehicle has a right to interfere, not even cooperatively, then we will be forever stuck with suboptimal results.

  6. Anonymous Avatar
    Anonymous

    Europeans can afford it because they have decided to put a lot more taxes in the black box for other people to decide how to spend. We can’t get this off the ground under “no new taxes”, and “user pays” will never make it happen.

    I doubt the actual costs are much different there, and higher still for the TGV trains, so similar numbers to those Bacon presents probably accrue.

    In other words the people who spend the money in the black box may have made a bad decision.

    Or, they may have put a much higher subjective value on the option of riding the train, whether or not it makes economic, schedule, or environmental sense.

  7. Larry Gross Avatar
    Larry Gross

    well is it fair to say.. that the Europeans are not hung up on the idea of rail “paying for itself” and because of that .. they have a good system with high ridership levels.

    Of course, someone might make the claim that we’ve made a similar decision with respect to roads because clearly roads do not pay for themselves either.

    So.. if we charge $4.00 a gallon for gasoline .. and spent it on regional rail for Virginia… what would be wrong with that?

  8. Anonymous Avatar
    Anonymous

    Although yuo refuse to believe it, road users pay far more of their costs than rail users. Unlike the rails, almost everyone benefits from roads and almost everone uses them.

    Unlike rail usage the GP is almost exactly correlated with road usage (the rail usage correlation exists, but not as high).

    Therefore it is hard to see how you can claim that roads don’t pay their way and the payments are not made by users.

    Otherwise, you are correct, European ridership is high becasue the riders don’t pay their full cost. Or more precisely, they pay for the rails anyway, so they might as wll use them.

    If you charge $4.00 for gas and spend it on rails, there is nothing wrong with that, but then you have to abandon the idea that users should pay for their own services.

  9. Larry Gross Avatar
    Larry Gross

    Oh I do believe it.

    I also believe that every major urban city in this country has people who suffer health problems from automobile pollution.

    And their health care is not paid for by the gas tax.

    And we have people’s property taken away without full and fair compensation so that roads won’t be so expensive.

    And we have people who use transit and not autos but pay sales taxes that go to benefit automobiles.

    and last, but not least, we spend trillions of dollars and waste young people’s lives to “protect” our “interests” in the Middle East.

    Do you think the Europeans know something that we don’t?

    Don’t get me wrong. Automobiles/personal mobility is some almost everyone highly values and would be loath to give it up.

    But most people also believe that we should have a good rail system like Europe has.

    Poll after poll shows support for transit from the public and they realize that it will come from taxes.

    Why not take the sales tax that currently goes for roads and use it for rail – especially if the pubic supports it?

    Is this “user pays”?

    well I’ll let you decide.

    If you think the gas tax is “user pays” then why is a sales tax NOT “user pays”?

    We are HYPOCRITES to admire Europe’s rail system – where they have made a national commitment to pay for a system that benefits virtually everyone so that they don’t have to take a car every time.

    We pine away about their rail and then we use a double-standard in this country where we give excuses as to why it is not “worth” it.

    That is why I asked the question about “subsidies”.

    Tell me what the subsidy is for a European or Japannese rail rider then let’s talk about if the issue is that their rail is more cost effective (or not) .. or in their case – they’re willing to pay for an effective rail network.

    They take the train on “holiday” and we sit on I-95 waiting for accidents to clear.

    You (we, everyone).. pays your money and makes your choices..

  10. Lyle Solla-Yates Avatar
    Lyle Solla-Yates

    Larry-

    Interesting points. Trains are close to my heart as well. I agree with Anonymous that using gas taxes to subsidize transit is not ideal, though it would be much better for the people of Virginia, since they would benefit from gas priced closer to its true social cost (about $11), and the transit improvements. However, landowners near the stops would benefit from much higher land values as a result of this multimillion dollar subsidy, and would only pay a small portion of that in taxes. It would be much more fair to use the gas tax money for health care and some for transit and energy alternatives like wind. The transit may be able to be funded mainly out of a windfall land tax on property owners nearby to capture the rise in value and maintained with user fees. Of course, that requires improving those dismal fiscal numbers, which a gas tax would contribute to.

    Lyle

  11. Larry Gross Avatar
    Larry Gross

    you know… the DOT cannot use their gas tax revenues to develop property to deliver profits that can be plowed back into transportation.

    But Public-Private Partnerships can.

    A public-private rail Partnership that allows the investors to buy/develop land around the stations might provide a profit motive that would attract investors to provide, dare we hope, subsidy-free rail?

    Or how about allowing a consortium build an operate a true multi-modal highway/train system – with – get this – real live multi-modal facilities that link the two.

    I think by having separate government DOT and Rail/Transit agencies competing for tax dollars rather than a private investor approach virtually insures a continuation of roads vs rail.. dynamics.. when .. instead we should be treating them as key legs of an comprehensive mobility policy.

  12. Anonymous Avatar
    Anonymous

    I argue for user pays mainly to show how ridiculous it is. The real issue is whether all the beneficiaries pay, and pay something near the value of the benefits.

    Because that is so enormously complicated, usually a good estimate is to just throw the money in a black box, set the priorities and split the bills. If you think you are getting screws on one priority, you are probably getting a bargain on another. I think the whole idea of the black box policy is that we are all beneficiaries and we all pay.

    It is only the politicians that cook up schemes to distort this by geographically diverting funds.

    But, claiming that user should pay for only those things we don’t like and calling for subsidies for things we do like is likely to cause far more disparity in who pays for what than either a strict user pays policy or a strict black box policy.It is also a transparent money grab.

    The black box policy at least forces you to recognize there is only so much money in the box. The user pays policy tends to rely on the idea that there is infinite money available.

    But, what we need to do is be more demanding about our facts. Larry is right, gas taxes don’t pay for health care. Gas also doesn’t cause all health problems, so such an argument is inherently dishonest.

    Likewise, the true social cost of gas considers only the cost side of the equation and not the benefits. This is a distortion of how social costs are measured and it is equally dishonest. Consequently the claim that $11 dollars should be the true cost of gas is patently ridiculous, and most people will reject it out of hand.

    But, I agree with Lyle. It would be much more fair to use some gas tax money for some health care and some for transit and energy alternatives like wind. But transit, wind, solar and health care don’t get of scott free. If you use the same level and type of arguments that the true social cost of gas advocates with regard to wind, solar, and rail, then the social costs of all will be elevated equally, and ONLY then we can make fair comparisons.

    In the economy, what goes around comes around. In the end we all get what we all decide to pay for. There is no reason to think that making lopsided arguments will improve the end result for all of us, and that should be the goal.

    And, making lopsided arguments makes us look like morons. We’ll do better when we learn to make fair arguments that are so well reasoned everyone can see the benfit.

    RH

  13. Anonymous Avatar
    Anonymous

    “I think by having separate government DOT and Rail/Transit agencies competing for tax dollars rather than a private investor approach virtually insures a continuation of roads vs rail.. dynamics.. when .. instead we should be treating them as key legs of an comprehensive mobility policy.”

    Now you are talking. And when we are willing to have a tax structure like the Europeans, maybe we can afford it.

    In one sense we already have a multimodal system in Metro. Metro is the regions largest supplier of parking.

    I’m not conviced that private enterprise is the best way to deal with transportation as a total function because there are too many elements of monopoly and public interest involved whcih private industry does not handle well. There is plenty of room for concessions, which can be recompeted if things aren’t going well.

    RH

  14. Larry Gross Avatar
    Larry Gross

    “But, claiming that user should pay for only those things we don’t like and calling for subsidies for things we do like is likely to cause far more disparity in who pays for what than either a strict user pays policy or a strict black box policy.It is also a transparent money grab”

    Here’s the question.

    Do you consider our schools “subsidized”?

    How about our Sheriffs and Deputies; do you consider that service “subsidized”?

    tell me why education is not a subsidy but transit is.

    Now.. if you agree that education IS, in fact, a subsidy, then we’d be started out agreeing (for a change!) 🙂

  15. Anonymous Avatar
    Anonymous

    I don’t know why you ask such questions. I never said anything one way or another about schools or sheriffs.

    The way I see it, the state has a number of product lines and limited dollars. We waste millions in advocacy causes to try to convince others that our particular advocacy is so important that it is sacrosanct.

    Fully fund the schools.

    No pollution is allowed.

    Kick out all the aliens.

    It is a futile effort and a total waste because we know none of thes things will be done.

    My solutionis quite simple. Put the budget on the back of your tax form and allocate your dollars wherever you like. That way, you cannot complain that your dollars ars subsidizing something you don’t approve of.

    The first time we run out of sheriffs, they will move way up on the list of things people allocate to.

    The legislature would be able to fiddle at the margin to adjust some spending, but within limits it would be defined by those sending in the checks.

    The advocacy groups would have to shift their targets from spending a lot of money on a few (corruptible?) targets to actually swaying peoples cash opinions. As it stands now they have to advertise to raise money, advertize to advocate their position, and give money to the political campaigns.

    This would save them a lot of money and reduce the waste of a lot of money, because now they only need to do one of the three: advocate their position in a way that will affect other peoples allocations.

    If you do this, one of two things will happen. The budget might turn out much as it is today, and that would be a vindication that the system works, except that the new system would be a lot cheaper.

    The other possibility is that we will discover that the present budget is wildly out of whack compared to how people want it spent, in which case there will be a lot of previously pious egg faces walking around.

    ——–

    We already do some of this, with various check off items, why not take the logical leap?

    Even if the results were not binding on the legislature, if the results are simply published, the legislature would have to do some real selling to do in order to justify some other spending condition.

    So, my answer is throw the money in a black box and spend it according to the wishes of the people who contribute. It makes the issue of user pays and subsidies moot.

    And, if the advocacy groups think more money should be spent on something, they can throw it in the black box voluntarily, along with their allocation request.

    The downside is that it might take a lot of hot air out of the room when people can no longer claim with any authority that “Statistics show that a majority of the people favor apple pie, as long as they don;t have to pay for it.” Such people might even become unemployed and have to go find something useful to do.

    ————————

    Now explain what your question had to do with the quote. I missed the connection entirely.

  16. Anonymous Avatar
    Anonymous

    My feeling on schools is that they are a far better candidate for a takeover by private enterprise then roads are.

    We should just give up on public schools and give out vouchers. Let private enterprise compete for the voucher dollars and contend with lunatic parents.

    Since everyone is eligible for the same voucher dollars over their educational lifetime, we would not have to consider it a subsidy.

    poor people could allocate more of their tax dollars to schools so that they could afford better private enterprise options. Rich people who would send their kids to privat scholl anyway could allocate zero to schools so they don’t have to feel like they are paying twice.

    They could allocate more of their money to rail transit, which is mostly used by people who are fairly well off.

    RH

  17. Anonymous Avatar
    Anonymous

    The state budget is kind of like the lottery a statistics professor devised.

    He offered a lottery prize to his 25 students. Eacs student could enter as many times as he liked. The prize was $1000 divided by the number of entries.

    The professor never paid out more than a dime.

    So much for the common good.

    RH

  18. Larry Gross Avatar
    Larry Gross

    “Now explain what your question had to do with the quote. I missed the connection entirely.”

    “ut, claiming that user should pay for only those things we don’t like and calling for subsidies for things we do like is likely to cause far more disparity in who pays for what than either a strict user pays policy or a strict black box policy.It is also a transparent money grab.

    you were comments on subsidies for the things we like and black box for the things we don’t like

    and I was pointing out that a lot of the services that we LIKE are not considered subsidized.

    Most don’t consider schools, law enforcement, EMS, mental health services, van transportation for the elderly, etc – as subsidies but legitimate taxpayer-funded services.

    Your idea of choosing what one wants to fund is totally crazy because many folks would not fund these services no matter how bad the services deteriorated.

    Felons and folks who received tickets and fines would not give a dime to law enforcement.

    Folks that are not even aware of unfortunate people taken care of by the state – would defund those services in a heartbeat.

    License plates would no longer be purchased.

    and your philosophy with respect to services and buying only what you want is in stark contrast to your views of infrastructure where you advocate taking property taxes from folks to build infrastructure for others.

    why not… in your proposal – also let folks decide to NOT buy infrastructure for growth at all?

    but my point is that many services and infrastructure are – not user funded but in fact, subsidized.

    They don’t operate on user fees.

    and the Sheriffs department is an example.

  19. Anonymous Avatar
    Anonymous

    OK, now I see your point.

    Fully funded necessary services are fully subsidized. I hadn’t thought of it that way because we usually think of a subsidy as partial help, not total support. And ususally it applies to private services or maybe Authorities: places that pay for some but not all of their own costs.

    As I see it, the services you mention are the ones that we agree everyone benefits from, even if we are not sure exactly how. The black box paradigm is one that assumes what goes around comes around. In the case of schools, everyone gets the opprotunity for an education, and later they pay for the cost of that opportunity.

    How do we know the idea is crazy if we’ve never tried it? If law enforcement suffers, it would recover pretty quickly. Some people have more compassion for old people than others, it might come out in the wash, just as we assume fully funded services do.

    If the idea is crazy, why do we spend so much money on polls?

    Finally, the idea does not have to be binding or completely binding. You could allow the representatives a percentage to wiggle with.

    At the very least, it would provide an unequivable measure of where people think they would like to see their money go.

    Look at it this way, the experiment would cost almost nothing, since we send out the tax forms anyway.

    RH

  20. Larry Gross Avatar
    Larry Gross

    in the context of this thread – if you ask the Europeans if rail is subsidized or instead a a necessary government service – not considered a subsidy

    what do you think they would answer?

    and so that was my point about the USA and rail service (or even urban transit)…

    do we consider it a necessary government-provided service – or a discretionary service … heavily subsidized by those – who would not willingly fund it?

    The Europeans and the Japanese, I would posit – don’t consider countrywide rail service as subsidized service but rather an essential government function for mobility.

    But I still ask this same question – for completeness.

    We calculate the “loss” per passenger… with rail service but maybe just as important is what is that number for European and Japanese rail?

    Does it cost the equivalent to provide universal mobility in those countries as this country?

    In this country – we see schools and prisons as a necessary government function and not “subsidized” services.

    why?

    and give the answer such that it also answers the same question with respect to rail?

    What I’m looking for is a consistent philosophy with regard to what should be government services and what should not.

    Europe thinks rail is a government service. We do not. Why?

  21. Danny L. Newton Avatar
    Danny L. Newton

    One of the best explainations of why the Japaneese system works so well in Japan is that their old transportation system was totally destroyed in the war. There was no possibility of a sudden surge of private ownership of automobiles. The system was simply designed to carry large numbers of people from the first day it was built. The trains were financed from passengers who had no alternative. Japan did not have traffic problems until their populace obtained the ability to own private autos.
    Using the data on the train and an interest rate equal approximately to the background inflation rate(3.5% at 20 years), I get the daily cost of the train trip only between $22.47 and $93.09 over a twenty year horizon. The subsidy is large enough to finance both the first cost and the operating cost for the first year.

  22. Larry Gross Avatar
    Larry Gross

    Good insight!

    But what about Europe?

    Our own Interstate Highway System was modelled after the Autobaun.

    Even though we bombed the heck out of Europe also.. the Autobaun and the car culture – actually started over there…

    and yet.. when they built back their transportation – the included rail…

    Why do Autobaun users not claim that European rail is a waste of money?

  23. Anonymous Avatar
    Anonymous

    “More than half a million rail commuters could face substantial fare increases for the first time in almost a decade.

    The Strategic Rail Authority, which is struggling to cover the cost of running the network, is to abolish the price cap on season tickets, according to The Times.

    The Rail Passengers Council says that increasing the cost of travelling by train would be a “dumb move” and that commuters should pay their fair share but only if “the railways are delivering a decent service, which they are not at the moment”. “

    BBC

    Apparently they do have similar debates over there.

    RH

  24. Anonymous Avatar
    Anonymous

    “A few months ago, we were told that there were too many people on the roads, so a congestion charge was necessary to encourage people to travel by rail. Now we are told that there are too many people on the trains, so a ticket price increase is need to presumably encourage people to travel by road. I guess there must be some logic in there somewhere, but I can’t see it. “

    Jonathan Bryce, Reading, UK

    “Have all these people extolling the virtues of train travel abroad actually tried it? I’ve been Inter-railing so have travelled on most of Europe’s railways. Most trains are at least as dirty as ours, the services late and rather than there being trains once or twice an hour there is one or two a day. Finally to travel on a train which doesn’t stop absolutely everywhere you have to pay a supplement. Things here, while being far from perfect, are not actually that bad in comparison. “

    Andrew, London, UK

    “A friend of mine works for Connex, and was recently late for work (their employees are fined when they’re late). He was seriously told by his manager “You can’t depend on the trains to get to work on time”… and recommended that my friend buy a car. (I’m not joking!) “

    John Neal, Southampton, UK

    Posted without commnet.

    RH

  25. Anonymous Avatar
    Anonymous

    “THE MAIN problem with Gov. Arnold Schwarzenegger’s proposal to cut funding for the California High-Speed Rail Authority is that it does not go far enough. Instead of eliminating 90% of the agency’s funding, he should shut the thing down permanently.

    The bond measure to pay for the first leg of the rail system …..should be removed from the 2008 ballot and canceled. Public resources would be better spent on just about anything else, including delta levies, roads, prisons and schools.

    The rail authority wants to link Sacramento and San Diego by building a rail system for trains traveling at more than 200 mph. ….Made a permanent agency in 2002, it has worked to convince politicians and voters that a bullet train is a viable alternative to building more roads and airports.

    Unfortunately, the system’s financial plan is weak. A Federal Transit Administration review of urban rail projects …..shows that cost and ridership estimates issued by public agencies are invariably too optimistic. Given the exceptional scope of its plan, the high-speed rail authority’s figures appear to be no exception.

    Even if the cost of precision, …..did not exceed the $40 billion the authority projects, the system would never recoup its capital costs through fares and fees.

    Europe has a high-speed rail system that out-competes cars and planes for trips ranging from 120 miles to 230 miles, but …..even with environments better suited to high-speed rail service, the Japanese and Europeans still have to subsidize their systems.

    California’s population growth and strong economy may eventually overtax the capacity of its airports, but airports are much cheaper to build or expand than a high-speed rail network. A new, top-of-the-line airport might run about $10 billion. A substantial increase in capacity at LAX would cost about the same, but $5 billion would buy a lot of airport in Palmdale because land there is cheaper.

    Eventually, though, the day will come when regional and national interests will require greater airport capacity, and cities and counties may have to use eminent domain to expand their metropolitan airports. If we feel civic guilt about this, displaced residents should receive a premium above market value for their property. Such generosity would still cost only a small fraction of a statewide high-speed rail system. “

    JAMES E. MOORE is chairman of the department of industrial and systems engineering at USC, director of the transportation engineering program and a researcher with the USC Center for Risk and Economic Analysis

    I thought this was intersting for several reasons.

    Here we have a publicly funded permanent agency whose job it is to advocate a perticular point of view. the author claims not only that the high speed rail wil never pay, but that the money would be better spent on other product lines entirely.

    He points out that our geography and economic climate are different than Europe: our intercity trips are likely to be much longer.

    And he reocmommends changes in the eminent domain system.

    RH

  26. Anonymous Avatar
    Anonymous

    “In the past 20 years, almost 1 300 km of high-speed train track has been built in France. Passenger use has grown, but the government has justified the massive TGV programme not on financial viability but on socio-economic grounds, with the fare structure reflecting this approach. In face, in 1996 the French rail system generated $ 1.67 billion in revenue, but it cost $ 11.67 billion to run. So the net annual loss was $ 10 billion.

    Even some leading French rail officials question the wisdom of massive TGV investment. At a 1996 transport seminar, Claude Martin and, chairman of France’s RRF (Reseau Ferroviaire Français) – the independent body responsible for all French rail infrastructure – predicted that most French and European high-speed rail projects would have very low passenger volumes. He also said that the much touted Paris – Brussels – Amsterdam – Cologne TGV link would be a financial disaster because the level of users will never pay back the $ 19 billion cost of building it or the ongoing costs of running it.

    His remarks were echoed by Wolfgang Hager, director of the European Centre for Infrastructure Studies (ECIS), who said that across Europe rail projects have traditionally been developed with no regard for financial costs, asset depreciation, maintenance costs or user traffic.”

    Quote from a publication of the RailRoad Association of South Africa.

    RH

  27. Larry Gross Avatar
    Larry Gross

    I think anytime tax money is used for some public purpose there will be debate no matter what country with respect to whether the money is for a “subsidy” or for a necessary government service.

    We have debate in this country about whether public schools are justifiable as well as universal health care and Medicare and tax write-offs for home mortgages.

    We slam Europe/Japan for subsidizing rail but then we turn around and subsidize home mortgages – which actually encourages people to commute to the exurbs and spend tax money on commuter road infrastructure.

    Now that the gas tax no longer can pay for new roads – and we may be forced to build toll roads – it looks like that mortgage subsidy is going to get eaten up by road tolls.

    Europe subsidizes rail – we subsidize sprawl….

    Let’s take away the home mortgage subsidy and see what happens.

  28. Anonymous Avatar
    Anonymous

    The mortgage subsidy applies to city condos as well as to SFH’s in the suburbs. What makes you think this is a subsidy for exodus?

    I have a number of neighbors who sold their homes in town, paid off the mortgage, and paid cash for their new home. Where is their subsidy?

    RH

  29. Anonymous Avatar
    Anonymous

    If you take away the mortgage subsidy, you will have a lot more renters. Capital and the profits it generates will be more closely held, and fewer people will benefit from the underlying benefits of home ownership. Fewer people will have their own wealth, and they will pay less tax on it.

    More people will be dependent on fewer for more services, and have less interest in what goes on around them.

    RH

  30. Anonymous Avatar
    Anonymous

    If it turns out that subsidizing sprawl is cheaper than subsidizing rail, and it results in more tangible property and less public expenditures for intangibles, then where is the harm in that?

    It cost the French 11.7 billion a year to subsidize rail. You can build a lot of water and sewer lines for that kind of money.

    RH

  31. Jim Bacon Avatar
    Jim Bacon

    Larry, one ill-considered subsidy does not justify another ill-considered subsidy. You are right, mortgage deductability is a major contributor to the U.S. pattern of excess housing stock and mass over-consumption. Our nation is way “over-housed.”

    You can make the case that mass home ownership helps create a more stable society. I agree — except when mass home ownership leads to mass financial delinquency, as seems to be happening today. But there is no way to justify the mortgage deduction for the purchase of second homes/vacation homes. That is subsidizing conspicuous consumption. I would be perfectly comfortable capping mortgage deductability or eliminating it entirely.

  32. Anonymous Avatar
    Anonymous

    Why is the mortgage deduction responsible for lenders making bad loans?

    RH

  33. Larry Gross Avatar
    Larry Gross

    No subsidy means that it’s much harder to “make” money on a home even in NoVa.

    The overheated mortgage market would not have happened if mortgage interest could not have been written off.

    So RH – your “subsidy” for the guys who sold their NoVa homes was the difference between what their house actually cost them verses what it would have really cost them if they could not write off the interest – over 20 or 30 years.

    Basically when they moved – they sold their “investments” – their “subsidized” investments.

    Imagine what would happen if the Feds subsidized stock and bond purchases….

    How many folks in NoVa would buy homes if the interest could not be written off?

    Further.. what would happen to property tax revenues if less people bought homes but rented?

    The subsidy causes a demand that would not be there if not for the subsidy. It distorts the free market and causes costly externalities.

    The Feds got smart a few years ago when they realized that letting folks write off interest on other purchases like cars was causing problems with auto loans.

    It’s about that time when the Feds shut down the interest write-off on cars that Auto Leasing became popular. Now the buyer takes the hit – which is the way it should be.

    and it may happen. Because the Feds needs to deal with the deficit and Medicare/Health car issue and the mortage interest write-off is going to be on the table starting with 2nd homes and then doing like they did with the auto interest… phased in over several years or .. perhaps.. you won’t be able to write interest off until you’ve owned the home for a few years… and even then not the whole amount…

    I actually think.. it is the single biggest factor in sprawl.

    Without the mortgage subsidy, quite a few folks would not be willing to drive 50 miles to a home because it would not longer be a gauranteed “investment”.

  34. Michael Ryan Avatar
    Michael Ryan

    This study makes no sense. Look at the ridership numbers of 14000-58000 a year. That equates to 38-159 passengers per day.

    These might be bogus, lowball figures, but I wouldn’t count on it. Remember, the flagship section of this line is intended to bring high speed Bristol to DC rail. This line doesn’t even pass through Richmond. It just goes to Richmond. Take a look at their route map.

    I think the figures they used might be pretty good. Are there more people from SW VA that want to travel to DC, and then be forced into public transportation and cabs when they get there?

  35. Larry Gross Avatar
    Larry Gross

    how did the route get selected?

    Was there an actual plan to route it to where there would be greater demand?

    …Author: Department of Rail and Public Transportation

    no wonder.. this is like asking VDOT to design a trans-Virginia road corridor…

    why doesn’t the GA … REQUIRE all such studies to be vetted by JLARC?

    Also.. these reports should always be required to disclose how much in taxpayer funds were used to generate them.

    and I still think we ought to let a PPTA get involved.

    They may not be able to make money on the rail itself but how about development at the termimus?

    (which I realize is one the hits on the Tysons Project but I still think – a better approach if you really want to see it actually happen instead of killing more trees with future studies.)

    we keep saying we want transportation to integrate with land use – but then we keep on doing them separately.

    and we still think in terms of rail verse road rather than mobility that connects places where we work and live.

  36. Steve Avatar
    Steve

    at full retail, you can’t fly from Bristol to D.C. and back for $600, and there are no direct flights

  37. Anonymous Avatar
    Anonymous

    “The subsidy causes a demand that would not be there if not for the subsidy. It distorts the free market and causes costly externalities.”

    But the people would still exist and they have to live somewhere. What demand would the subsidy remove?

    Total costs = cost of subsidizing homes + costs of not subsidizing homes.

    Your claim of costly externalities is one sided because you have made no attempt to consider the other part of the equation.

    The mortgage subsidy also subsidizes renters. Without the mortage write off the government would have collected more taxes but on fewer homes. The people who didn’t buy homes would ahve lost the “free” portion of the write off, but they would also have lost the other gains from homeownership not related to the write off. Having not bought homes, they would be renters and rental prices would be higher. Because only those that could front the full cost would be able to rent out homes, more cash flow would go from the have nots to the haves.

    The best low cost answer might be clear to you, but it isn’t to me.

    The Feds are already closing the loophole on second homes: you can no longer sell you primary home take the writeoff, move to your secondary home, and later sell it and take the writeoff again.

    Once again, the government has induced certain behavior with promises it has later broken. Such a broken promise could easily take a hundred thousand dollars out so some people’s retirement plans. If they wind up on the dole in old age or suffer from inadequate health care for lack of money, will the government come out ahead, or behind? If the government had not induced them to own second homes, would they have done beter with some other investment, and therefore the government also?

    We don’t know, but we do know the Fed broke an implied promise.

    ——————————–

    There will still be a house price gradient with distance, but with higher fuel prices the gradient will be steeper. Those with large homes on the fringes may have to dump them for smaller homes closer in, but the price of those will rise dramatically due to lack of supply.

    The fact that we will be able to travel lesser distances for the same price will drive still more demand for “more places”.

    Your argument suggests that sprawl is all bad when really it is still the same problem:

    Total costs = costs of sprawl + cost of avoiding sprawl.

    Arguing only one side doesn’t prove anything.

    RH

  38. Michael Ryan Avatar
    Michael Ryan

    Was there an actual plan to route it to where there would be greater demand? Was there an actual plan to route it to where there would be greater demand?

    This is a public-private thing, and as such I suspect it had very little input from DRPT. They merely want us all to pay for it.

    This is the same theory as to why urban VA pays to have US-58 massively upgraded, or to build I-73; as an economic sop to the rural voters.

  39. Larry Gross Avatar
    Larry Gross

    Oh.. I agree.. the way that we do roads … establishes an “we can do rails like they do roads” mindset.

    Both are “unhelpful” in advancing mobility.

    Both reveal organizational mindsets that think their mission is to their own corporate culture (building roads and building rail) than to customers (who want mobility).

  40. Larry Gross Avatar
    Larry Gross

    re: subsidized mortages

    Headline:

    Average rent goes down for first time in five years

    … “as developers and homeowners caught in the housing downturn flooded the market with units that had once been for sale”

    “….Over the past 15 months, developers have also canceled about 120 condo projects, totaling more than 20,000 units, and turned many of them into rental projects.”

    http://www.examiner.com/a-1006620~Average_rent_goes_down_for_first_time_in_five_years.html

    one has to ask – why were these units not built as rental units to start with?

    I don’t think taking away a subsidy is wrong at all much less the government “reneging”…

    But let’s look at this the other way. What is people who rented could also write off some of their rental expenses to “even” up the disparity between purchased units and rental units.

    Would this be a good idea?

    Should the government.. therefore subsidize ALL housing because in not doing so – aren’t they really penalizing and not provide an equal benefit to those that rent.

    How about the government being equally fair to everyone and give everyone a housing “subsidy”?

  41. Anonymous Avatar
    Anonymous

    You have no idea how this really works, do you?

    Ho many rentals do you own?

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