{"id":25593,"date":"2012-01-17T12:00:56","date_gmt":"2012-01-17T18:00:56","guid":{"rendered":"http:\/\/www.shotinthedark.info\/wp\/?p=25593"},"modified":"2012-01-17T12:48:21","modified_gmt":"2012-01-17T18:48:21","slug":"the-light-rail-money-pit-part-ii","status":"publish","type":"post","link":"http:\/\/www.shotinthedark.info\/wp\/?p=25593","title":{"rendered":"The Light Rail Money Pit, Part II"},"content":{"rendered":"

Dave Osmek – who’s a businessman, a city councilman in Mound, and is running for the State Senate<\/a>, either to replace Gen Olson or to run against Terri Bonoff, depending on how redistricting works out – got curious about some of the Metro Transit’s numbers on how light rail’s been working out financially.<\/p>\n

Now, as I noted yesterday, I’m not anti-rail-transit, per se<\/em>; I’m anti-anything that eats up two taxpayer dollars for every dollar it generates in user fees, with no end in sight, to serve a very dubious purpose.<\/p>\n

I thought the current taxpayer subsidy of $4 for every $2 fare – which the Met Council admits as the current operating subsidy – was unconscionable.<\/p>\n

As Dave notes, those numbers are too pollyannaish.<\/p>\n

Using numbers from the Met Council website, he crunched together the numbers for the Hiawatha Line.<\/p>\n

And they’re not pretty:<\/p>\n

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The “Total Expenses” column is what it costs to run the line for a year. \u00a0They’ve jumped 50% since the line’s first full year, by the way – way faster than inflation.<\/p>\n

The “Rider $$$” column? \u00a0That’s how much they collect via fares. \u00a0Note that if you divide it by 2 – the $2 you pay for a fare – you do not <\/em>get the correct ridership numbers; Dave included a “Ridership” column; you’ll note that the average rider pays something close to 96 cents; between special student and senior fares, promotions (like “Ride home for free on Saint Patrick’s Day”), and the many, many turnstile-jumpers that ride the line, the line gets less than a buck per rider.<\/p>\n

And so the “Public $$$” column comes in; that’s the subsidy we pay to make the “Total Revenues” column match the “Total Expenses” column.<\/p>\n

And that leads us to the “Subsidy Per Ride” column; that’s how much public money it takes to make the revenues cover the expenses. \u00a0For the fares the rider pays – a little over ninety cents a ride, on average – the taxpayer is tacking on an extra $1.60. \u00a0Put another way, every $2 fare that is actually paid is covered by another $3.50 or so.<\/p>\n

But that’s really just the tip of the iceberg.<\/p>\n

The line was paid for with bonds – $715,000,000 in bonds floated at an average of 4%. \u00a0They were floated at all levels – state, Met Council, the Feds – and eventually it’s all money that goes to the Chinese.<\/p>\n

These bonds, like a huge mortgage, get paid every year over the course of their 30 year life. \u00a0And the annual bond payment on $715,000,000 comes to about $41,348,521, give or take.<\/p>\n

That’s on top of the line’s operating expenses.<\/p>\n

So if you add each rider’s share of the bond payment to the price of the subsidized ticket, it means the actual public subsidy for each ride comes to an average of $6.41 for every $.90 cents they raise in fares; put another way, \u00a0each $2 paid by the ripe sucks, the 45% who actually pay for fares, costs the taxpayers a little over $13.50.<\/p>\n

That is an awful lot of money.<\/p>\n

So – how about the Central Corridor?<\/p>\n

It’s worse. \u00a0Much worse:<\/p>\n

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Assuming an average of $.99 a ride (same as Hiawatha using <\/em>the Met Council’s ridership numbers\u00a0– and I think both are generous),it adds up to a $17 million annual subsidy – that is, revenues will be $17M short at covering the annual nut. \u00a0Every year<\/p>\n

Add the $55 million in annual bond payments; divide it by the ridersihp, and you’re talking a public subsidy of $8.77 per ride – or $17.54 per paid $2 fare.<\/p>\n

And the Southwest Light Rail?<\/p>\n

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Again – using the Met’s ridership and bonding numbers, and carrying over the Hiawatha’s actual revenue per rider, it’ll actually get a little closer to covering its operating costs – but the $1.2 billion in bonds have to get paid. \u00a0Which means the subsidy per ride is going to be $10.97 – or almost $22 per full $2 fare.<\/p>\n

Worse? The Met’s philosophy seems to be “sell at a loss, make up for it in volume”. \u00a0None of the three lines will come within 60% of breaking even – so the taxpayer will be on the hook to subsize the lines to the tune of over 60% of the budget:<\/p>\n