Month: April 2010

“What Better Project Do We Have to Invest In?”

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This is a guest post from Jean-Francois Flechet, a Belgian immigrant who came to this country and established his own small business–Taste of Belgium Waffles.  He now has two locations in Cincinnati and Columbus.

I am writing this post to express my support to the Cincinnati Streetcar.

I am a small business owner; I have a store located in the middle of Over-The-Rhine in the Historic Findlay Market.

I love Cincinnati and I particularly love OTR, the architecture is fantastic, it’s a jewel for Cincinnati and the State of Ohio. I wish I could have lived in that neighborhood at the beginning of the 20th century and see OTR when it was thriving.

OTR was thriving up to the 30s when it felt as a victim of Prohibition, wiping out the many saloons and breweries that helped the neighborhood thrive. Now, by allocating the funds to build the Cincinnati Streetcar the City has a chance of saving Over-The-Rhine.

To me, the streetcar is about a lot more than just moving people; it’s about saving OTR. It’s about bringing new residents to this beautiful neighborhood, it’s about expanding Findlay Market and creating a striving community where people can find all they need locally, in an environment where they do not need to jump in their car every time they have to leave their house. It’s about promoting a neighborhood that was created when cities were made for pedestrians and not for cars.

The streetcar is about economic development. It is the ONLY credible project that I have seen in the past 10 years that truly has a chance of changing the face of OTR and bring the neighborhood back to life.

The minute we start building the streetcar, people will buy houses in OTR, rehab them, people will move in, new businesses will open. The economic impact of the streetcar on the city is amazing. An independent study by UC  shows that the benefit to cost ratio of the streetcar is 14:1.

What better project do we have to invest our money in? Please join me in supporting the Cincinnati Streetcar.

59 Years Ago Today…

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…Streetcar service ended in the City of Cincinnati.

In two years, Streetcar service will resume.

Why Can’t We Just Run Buses to See if the Streetcar Will Work?

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Several letters to the Enquirer have suggested running buses to see if the Cincinnati Streetcar will be successful.  This is a reprint of an earlier post explaining why such a  ‘bus test’ would be a costly experiment with little probative value.

Question: What would the harm be in dedicating buses to the streetcar route for a few years to see if the benefits are starting to be realized before spending $128 million to build the streetcar?

Answer: The harm would be threefold—direct costs, opportunity costs, and lack of probative value.

The direct cost would be the costs of acquiring and operating the buses.  In order for the bus experiment to be as accurate as possible, the buses would have to have a similar capacity and frequency to the streetcars.  I think we can all agree if the city were only running one bus along the route, it wouldn’t come anywhere close to approximating streetcar system. Similarly adding a few automobile ferries next to the Brent Spence Bridge wouldn’t accurately simulate adding additional lanes.

A single streetcar carries around 170 people.  A bus carries around 45.  The City plans on purchasing 7 streetcars.  A bus fleet with a similar capacity would number 26.4.  If you take into account maintenance and the need for spare vehicles, you could probably get away with 24 buses.  Each bus costs about $350,000, so 24 buses would cost $8,400,000.00.

Operating the buses would cost money as well.  Driver’s salaries are the largest operating expense in any transit system.  (One of the benefits of the streetcar is that a single driver’s salary is spread over 170 passengers instead of 45.)  To estimate the operating cost per bus I divided METRO’s total budget ($94.5 million) over the number of buses it operates (391) to come up with a per bus per year operating cost of $241,687.98.  Based on this projection 24 buses would result in a yearly operating cost of $5,800,511.51.

Running this system for a few years as suggested would be a very expensive test.  Three years would cost $25,801,534.53 in capital and operating costs.

But there are also opportunity costs as well.  The City estimates “Costs can be conservatively estimated to escalate $5.1 million each year beyond 2010.”  Delaying the streetcar three years would cost $15.3 million in inflationary costs.  With many construction companies in need of work and lower material prices, now is the time to build.   The other opportunity cost would be the delay of benefits to City that would come from having a streetcar.  I will not attempt to quantify them in this posting, but it is something of which to be aware.

Combining the direct and opportunity costs leads to a cost of the three year trial of over $40 million.  The next question: would this trial produce accurate results?  My belief is it would not.

The Streetcar will produce two main types of benefits—ridership benefits and economic development benefits.  The bus experiment will not accurately predict either type of benefit

Ridership on the bus experiment will be lower than it would be on a streetcar.  Route legibility of a bus route is worse than a streetcar.  Unlike a bus, someone unfamiliar with a streetcar route can see the tracks and know where the line goes.  People are more likely to get on public transit when they know where it is going.

Additionally the bus experiment assumes transit riders exhibit “mode-neutrality” when in reality they do not.  Mode-neutrality presumes that a transit rider will exhibit no preference for rail over buses.  This is not the case.  Many visitors to New York or Chicago will take the subway or the “L” but will not ride a bus to get around. For an example closer to home, think about the airport.  If you had to choose one or the other, would you rather take the train to Concourse B or the shuttle bus connection to Concourse C

Finally you will not receive the same economic development benefits with the bus experiment as you would with a streetcar.  The reason the streetcar encourages economic development is because it is a permanent infrastructure investment.  The tracks are laid in the ground and will not move.  People know that in 20 years the streetcar will still be running that route and make long term investments, like buying a house or opening a business, based on that fact.

By contrast, the bus experiment is not only temporary it is explicitly temporary.  Anyone who could wait to make an investment along the line likely would wait until the final decision on the streetcar could be made.  If an entrepreneur wanted to locate a new business along the streetcar line because it would attract more customers and make it easier to get to the store, she would likely wait until the decision had been made on whether or not to actually build the streetcar before making the investment. Fewer people will buy house or open a business along a bus route that will stop running in a few years and may or may not lead to a streetcar than would invest along an announced and funded streetcar line. Imagine if new exit was built off of I-75 that would be closed in two years if it didn’t receive enough usage, business owners would be reluctant to locate there for fear of their access being cut off.  The same would be true of a temporary bus experiment.

Because there will be lower ridership, less economic development, and considerable costs, conducting a bus experiment along the streetcar line would be imprudent and the results of such experiment would not accurately predict the success of the streetcar.  That would be the harm.

Correction: Six Fortune 500 Companies Along the Streetcar Line

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Cincystreetcar.com would like to apologize to 5/3rd Bank for excluding them on the initial list of Fortune 500 companies along the streetcar route due to inaccurate information on this CNN Money Map.

A Fortune 250 Company