Earning and Saving with the Streetcar

Posted on October 23, 2013 Updated on October 24, 2013

The most common misconceptions about the streetcar project involve concerns about return on the city’s $133 million investment. However, feasibility studies conducted by urban planning and risk assessment firms state that both the local economy and families can benefit financially from the streetcar.

SAVING FAMILIES MONEY

Federal Transit Administration (FTA) research explains that households located in transit-oriented communities (within a half-mile to a mile of a fixed rail station) save an average of $250 per month or $3,000 per year per household in auto-related costs as compared to households in auto-oriented areas. These savings are associated with the ability to walk to a wider range of destinations and to transit access itself.

EARNING MONEY FOR CINCINNATI’S 52 NEIGHBORHOODS

Benefits, costs, net present value, and benefit cost ratio were examined to calculate the risk of building a streetcar in Cincinnati. According to the Benefit-Cost Analysis conducted by HDR, a financial risk assessment company:

The value of total benefits for Cincinnati’s streetcar system is expected to be $430.9 million over 35 years between 2008 and 2042. Benefits are expected to exceed the total costs by $315.1 million. This represents a return on investment of 2.7 times, meaning for ever $1 that is invested, the streetcar will generate $2.70 for the City of Cincinnati.

The HDR analysis notes that there is a 90% probability that the Cincinnati streetcar will succeed.  Once operational, it will earn more money to be shared throughout the city’s 52 neighborhoods than the costs needed to build and operate the route. The Benefit-Cost Analysis results recommend that investing in streetcar system is economically worthwhile with minimal risk of economic failure.