MHF Canard: Light-Rail is an “Investment”

Reality: light-rail is the opposite of an investment. An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future. Light-rail is not an investment in any sense of the word. Anything that has so little value in the real world that it cannot survive without a subsidy is not an investment. In fact, light-rail isn't worthy of being called speculation because at least part of the time a speculative investment makes a profit.

Safeguard your wallet whenever you are solicited for an “investment” that needs subsidies. That is a reliable indicator that a con-job is underway. The reason why all light-rail systems in the country need to be subsidized is because none of them come close to covering their operation costs, never mind their total cost. Specifically, average light-rail fares cover less than 30 percent of operating costs.¹
Which implies that Hillsborough tax payers can expect to pay the other 70% of their “investment's” operating costs. There also is no revenue stream for replacing light-rail system at the end of 25-30 lifespan because operation costs consume more money than the fares provide.

Light-rail's advocates will object that the actual value derived from rail is due to net increases in transit ridership due augmenting the existing bus-fleet with trains. OK, fine. Then the question becomes “How many cars are removed from the road after rail is introduced?” Put another way, riders who transfer from riding buses to riding trains should not be counted because they do not reduce the number of automobiles on our highways.

The average change in transit ridership, for rail systems introduced after 1980, until 2008 is actually negative (-0.92%)². This reflect the nationwide trend for decreased transit ridership. Consequently, the average trend is for ridership to initially jump and then decline with respect to time. For rail system introduced less than 15 year ago the average increase in transit ridership is 0.14%. Essentially this means that nationwide transit ridership is declining and adding a rail system does not reverse that trend, but it does increase costs.

The data shows that the bulk of the change in ridership is between -2% and 2%.

As an investment light-rail is a turkey by any standards.

Scatter-plot of net change in transit ridership with respect to duration of light-rail service. With an exception of service durations less than five years, this plot shows that the net change in transit ridership tends to decrease over time.