Why You Should Think Twice Before Building a Rail Transit System

Photo Credit: Ben Schumin - CC BY-SA 3.0

Photo Credit: Ben Schumin – CC BY-SA 3.0

The Washington Metro system was shut down completely for a day this week to allow crews to inspect all of the power cables in the system. They found 26 cables and connectors in need of immediate repair.

This is just the latest in a series of safety problems and breakdowns that have plagued the system.

Metro has a large unfunded maintenance liability. This doesn’t surprise us because we expect American transit systems to have a backlog.

The difference is that unlike NYC, Chicago, Boston, etc., which have systems a century old, the Washington Metro system is actually new.

The oldest part of the Metro opened in 1976. That means Metro is 40 years old – max. Much of it is actually newer than that.

Forty years after opening, Metro already faces a maintenance crisis.

This should give other regions pause when it comes to building a rail transit system. My colleague Alex Armlovich points out that NYC has more or less been on a 40 year refresh cycle, with two rounds of major system investment since the subways opened. This doesn’t seem out of line as a capital life heuristic to me.

So cities need to keep in mind that if they build a rail system, they not only have to pay to build it, they pretty much have to pay to rebuild it every 40 years. This is a challenge because as we see it’s easier to muster the will to build something new than to maintain something you already have.

Given the huge permanent capital outlays implied by rail transit, you only want to build it where there’s sufficient value to justify it. Washington unquestionably achieves this. It simply hasn’t been able to capture the value into a maintenance revenue stream, plus Metro (like many systems) has been badly mismanaged.

The problem comes in for cities that aren’t NYC, Chicago, Boston, Philly, DC, and San Francisco. Once you get below that group, the value starts becoming more debatable.

Exhibit A is Los Angeles, which has spent untold billions on a huge rail system as ridership actually declined.  LA is continuing to build more and more rail.

But what happens when this system is old?

LA’s Red Line opened in 1993, so is 23 years old.  By the time LA finishes its current rail build out, it’s likely that the original parts of the system will be coming into the zone for a major capital refresh.

Thus shortly LA will find itself in a perpetual capital catchup cycle starting in only a couple decades. This possibly may not happen, but it has happened everywhere else, so why should LA be different?

Given the ridership levels we’ve seen so far, will the value added from rail vs. the old bus approach be there? It’s not looking good. And if the case in LA is looking weak, certainly smaller and less dense places are even more speculative.

All these smaller cities investing billions into rail had better hope their projections of massive benefits come true, because all too soon the rebuild bill will start coming due.

If you don’t believe me, just ask Washington.

from Aaron M. Renn


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