Economics

Studies and Reports on the Cincinnati Streetcar

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There have been numerous studies, presentations, and reports on the Cincinnati Streetcar that explain why streetcars are good investment for the City of Cincinnati.  Here are the links to these documents:

HDR- Cincinnati Streetcar Feasibility Study

HDR- Cincinnati Streetcar Economic Impact Study

HDR- Cincinnati Streetcar TIGER II Benefit to Cost Analysis

Cincinnati Streetcar Environmental Assessment

Appendices to Environmental Assessment

University of Cincinnati Streetcar Study Evaluation

City of Cincinnati Streetcar Presentation

City of Cincinnati Climate Action Plan (pg. 52)

Growth and Opportunities Study of the City of  Cincinnati (pg. 61)

Agenda 360 (pg. 20)

Over The Rhine Green Preservation Study

Letters of Support for the Streetcar

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

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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.

Casino Developer: Extend Streetcar to Broadway Commons

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The Enquirer is reporting that the developer of the proposed casino at Broadway Commons would like the Cincinnati Streetcar extended serve the new venture:

But to their credit, the Rock Ventures group, which will back the Cincinnati and Cleveland casinos, aims to design its facilities to connect with the neighborhood. They pledge not to build on-site hotels to keep customers “captive,” but actually work with downtown hotels, restaurants and other venues. They’re willing to discuss a link to the Broadway Commons casino from a proposed downtown streetcar line, should that project eventually get under way.

In addition to creating new economic development all along the line, the Cincinnati Streetcar will also increase the functionality of our existing assets.  Business will have access to new customers riding the streetcar.  Parking garages that are farther away from the final destination than people are willing to walk can now be used, with a streetcar taking the patrons the last mile.  Hotels will have a larger range of attractions that are accessible without needing a car.  Support Our City–Build the Streetcar

The Streetcar Will Make Car Repair More Convenient

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Even if you don’t ride the Cincinnati Streetcar on a regular basis, you will still benefit by saving money on parking when going down to a big game or the fireworks.  Another way the Streetcar will help occasional riders is by getting you places when you don’t have access to a car.

One of the biggest hassles of getting your car repaired (aside from the cost) is getting to and from the repair shop.  A lot of times, the car can make it there, but it will take hours to fix it.  During that time you can either wait in the waiting room reading a six month old People Magazine or drop the car off and do something else.

With over half of the jobs in the entire city in Downtown and Uptown, a worker could drop their car off and take the streetcar to their office.

If you don’t work along the line, you could take the streetcar up to the Zoo, downtown to the Riverfront or Findlay Market, or instead of waiting in a car repair shop, go to one of the many museums along the line.  The map below shows the Google results for automobile repair along the line.  There are several mechanics to choose from.

Unfortunately technical difficulties prevented the route from being shown as well as the results.  The route runs from the Zoo in Avondale to the Riverfront.