Posted by Michael Earl Patton

Photo courtesy of here.

The recent Uniersity of Cincinnati assessment backing the sugar-plum claims for the proposed streetcar may have brought in a few dollars to the university, but it also shows the standards that enable one to pay for pre-determined results.  It accepted ridiculous claims at face value, ignored outrageous assumptions, and cavalierly dismissed focused criticisms of the proposed streetcar in the July 2007 feasability study by HDR Engineering.

Such criticisms also focused on the parallel economic report by HDR Engineering. These reports and supplemental information may be found at the City of Cincinnati website, http://www.cincinnati-oh.gov, and then click on streetcars.

After presumably studying all of this, U.C. agreed that the city can expect at least at least a 160% return on its investment ... after a mere 35 years.

Traffic Congestion

And even that is a dream.  To get that return U.C. accepts that the streetcar will be worth $17 million in reduced traffic congestion over 35 years.  This is an amazing claim since unlike busses, the streetcars will stop in the middle of the streets to pick up and unload passengers, blocking a lane of traffic every time. How blocking traffic will reduce congestion is sadly unexplained.  Too bad—I would have loved to have seen the attempt.

It is Designed for Low-Income People—Really!

Another breath-taking claim is that the streetcar will provide $35 million over 35 years in benefits to low-income people compared to the current bus system.  Since the study also envisions large-scale redevelopment of Over-the-Rhine which would result in massive displacement of its current low-income residents, one has to wonder what the basis for this number actually is.  Perhaps it is the benefit of forcing low-income families from their homes and maybe even out of the city limits.

It’s the Cost, Not the Upkeep

The study also low-balls operating costs when calculating the return.  The U.C. assessment estimates $2.3 million per year, and maybe half of that would be covered by fares.  Over 35 years that’s about $40 million.  That appears to be the figure used in the calculations although it was not explicity stated.

Naturally, the amount of ridership is dependant upon the fares charged, which the HDR Engineering studies recognized.  The highest ridership numbers come from free fares.  Even at $1 per ride, which was the highest amount considered, the fares would cover only about half of the operating costs.  If one does not charge any fare, then the operating costs would be about double, or $80 million.

This prompts a question: Are the benefits based on no fares being charged and the expenses based on the maximum fare evaluated?  The study doesn’t say.  The question is important because much of Portland’s ballyhooed system operates in a no-fare zone, and even many riders who should be paying board the streetcar in this zone to avoid paying.

See also Cheryl Crowell’s analysis that was published earlier in The Cincinnati Beacon,“Streetcar Math: Funny Numbers from the Boondoggle.” She questions why the total operating costs for Cincinnati are estimated to be about half of Portland’s system if Cincinnati’s would be only a little smaller.

Operating Costs Beyond the Pale

“Beyond the pale” is an old expression referring to poles planted in the ground that marked the end of England’s authority.  English laws only applied up to the pale and then one was subject to another, foreign set of laws.

The July 2007 study, which the U.C. assessment approved, is estimating operating costs at about $2.3 million per year, even after 30 years or more of operation.  It is not stated how they estimated for such a long period since the Portland streetcar system, upon which they rely for most of the comparisons, has been in operation only since 2001.  So, at best, there are just 7 years of actual experience and yet the costs are projected for a period that is over 4 times as long.

Everyday experience, from houses to cars to refrigerators, shows that one cannot use the operating and maintenance costs of the first few years as the standard for costs decades later.  The estimated period is far beyond what is justified—it is beyond the pale.

I’ll Pay You Decades From Now for a Streetcar Today

There is such a thing as the time value of money.  The study considers that building a short streetcar system for $100 million is a wise use of that money because of the (dubious) return over 35 years.  It does not consider other uses of the money which may generate a higher and more secure return.  Even an investment at 4% interest would have a far higher return over 35 years than the claimed streetcar numbers.

Democracy and Other Trivial Stuff

Finally we need to take a brief look at the Cato Institute study that the U.C. “study” so cavalierly dismisses.  The title tells us what to expect: Debunking Portland: The City that Doesn’t Work, and the Cato study doesn’t disappoint.  It is a scathing indictment of how democratic principals were subverted, how a select few greatly profited, how social services were cut, and how facts are being twisted—all to justify and pay for a short streetcar system.

The U.C. paper says that most of this doesn’t matter in its analysis.  Leaving aside the implicit statement that democracy doesn’t matter when it comes to deciding on whether to build a streetcar, it then goes on to ignore the twisting of data saying that that was a minor part of the Cato Institute study.

What the Cato Institute pointed out was that urban growth boundaries greatly restricted where people could build.  Then Portland allowed high density zoning next to the streetcar line.  In other words, the vaunted effect of development next to a streetcar line can be fully explained by the zoning code imposed by the government, NOT by popular will.  Some of this was also analyzed in my earlier article, A Streetcar Named Boondoggle.

As for the popular will, the people actually voted AGAINST the streetcar line expansion.  Other dangers to democracy were when Portland threatened opponents with arrest for possessing literature opposing the streetcar at public meetings and awarding contracts to insiders.  When the streetcar alone didn’t encourage development, the city gave tens of millions in tax breaks and other incentives.  To finance the tax breaks, social services were cut.

Given that Cincinnati City Council has repeatedly threatened to reduce social services already, cuts would be almost guaranteed if the streetcar system were built.  Given the favortism towards a few developers, we can expect more of the same.  Given how council awarded a no-bid contract to 3CDC to redo Fountain Square, no-bid contracts for at least part of the streetcar are highly possible.

Alternatives

Were not discussed.  This is unfortunate because bus service has already been cut twice recently and further cuts are envisioned.

Conclusion

The streetcar boondoggle is alive and well.  Even U.C. has decided to throw academic standards to the wind and, for a small price, become a mere sycophant instead of an independent analyst.

The studies hyping the streetcar rely on false comparisons, ignore the effects of Portland’s zoning codes and urban growth boundaries, call blocked traffic a benefit to congestion, appear to deliberately under-estimate operating costs, fail to consider alternatives, and stretch the payback period to 35 years—by which time all the politicians who promoted this scheme would be long gone.

I believe a robust mass transit system is necessary.  I do not think that a massive expenditure on an over-priced system that is almost guaranteed to fail is the best way to that goal.

Michael Earl Patton received his Master’s Degree in Aeronautical Engineering from the University of Cincinnati.

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