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Rail Transit for Southern California an Expensive Mistake

Peter Gordon
Assistant Professor of Economics and Urban & Regional Planning
University of Southern California

Ross D. Eckert
Associate Professor of Economics
University of Southern California

A group of scholars met recently at the University of Southern California for a one-day "Symposium on Transportation Alternatives Facing Southern California." In reviewing what was discussed and learned at the conference, one remarkable fact should be underscored; the analysis and recommendations as to the form urban transportation policies should take was absolutely unanimous. On the one hand, it is novel for "the experts" to agree so conclusively. On the other hand, this agreement suggests that those who have taken a close and detached look at the transportation problems of this region have something important to communicate to society at large.

It is customary for research in the social and the natural sciences to be a continuous and on-going process. Most research results must await further duplication and verification before being taken seriously by other independent-minded scholars. We learned that this is not so in the field of urban transportation. There is widespread conclusion that:

Rail rapid transit is probably the worst step Los Angeles could take to improve transportation. There do exist a variety of other, smaller steps that can easily be accomplished with strong and positive results. The most promising alternatives appear to be "para-transit" operations of several types that promise substantially larger benefits at a fraction of the costs of the proposed rail system.

It is rare that the policy choices can be so clearly contrasted in terms of (1) options that offer low benefits and high costs, in apposition to (2) options that offer high benefits and low costs. In the case of rail transit for Los Angeles, it is ironic that public officials speak most favorably and most often of the one option that offers the fewest benefits at the highest costs. This irony approaches an absurdity when one reflects how almost all levels of government have been steering a dangerous course through real an imagined fiscal disasters. Although the politics of "realistic expectations" has appeared to have taken hold across the political spectrum, it has not grasped the imaginations of the fervent advocates of rail transit for Los Angeles.

Professor Robert Ellickson of USC's Law Center attempted to develop an explanation of political and economic behavior that would resolve these ironies or paradoxes. According to Ellickson, the environmental movement has caused construction interests to seek out public projects that would replace the freeway, for example, in terms of largesse. He hinted that transit systems are expensive projects that the construction and design industries would benefit from and that environmentalists could support.

In order to represent a large number of other points made by a number of individuals, we first show why the current situation is in fact ironic by separately comparing the cases for and against rail transit versus the case in favor of more attractive modes.

The dominant fixed rail system under consideration in the Los Angeles Basin is the proposal for the Sunset Coast Line set forth by Supervisor Baxter Ward. This proposal was detailed at the Symposium by Mr. Ward's chief transportation staff member, Mr. Jonathan Beaty. Ward's proposal, which will be decided by the voters on June 8, 1976, is for a relatively conventional rail rapid transit system, the technology of which was developed in the period 1897-1908. The chief feature of the Sunset Coast Line is its scope: a rigid network of 232 mile, all of them rail lines, with nearly 90 major passenger stations at approximately two to three mile intervals that would be constructed along the median lanes of most of the region's major freeway arterials. Ward's system would be financed by a one-cent increase in the sales tax (generating revenues of approximately $280 million per year) and would be constructed over a 20+ year period on a "pay as you go" basis. The total constructed cost set forth by Mr. . Ward is about $5.8 billion although this does not include the cost of parking facilities, a 25.8 mile Starter Line (which alone has a price tag of about $800 million), nor the "feeder" network of buses that almost everyone agrees would be necessary to deliver potential passengers to the widely-spaced stations envisioned by Ward. Nonetheless, Ward states that his rail lines will be situated within three miles of more than 80 percent of the regions's residents.

The proposal to build a massive new fixed rail should be placed in perspective historically. The take-over by the public sector of urban transportation facilities since 1946 was an almost reflexive response to the decline of private transit operators which commenced during the 1920s and affected every major U.S. city. It is rare that society attempts to reverse the decline of an industry that is "flunking the market test", and properly so. But public urban transportation was considered to be a special case in that it was thought to confer substantial public benefits that were eternal to the benefits captured directly by riders. For example, if enough people deserted their cars for transit, then there would be less congestion on the streets, less expenditures on highway building and maintenance, less air pollution, and less demand for fossil fuels. Additionally, the provision of public transit provides an alternative way of getting around for those who cannot or will not be served by the private automobile (the so-called transit dependent). In order to capture these "external" benefits of rail transit, drivers of cars must be willing to leave their automobiles for rail transit. The success of transit, therefore is based on the number of people "diverted" from their cars. Diversion is the key issue: a transit system that does not divert drivers in droves will not have "mass" patronage, without which it cannot offer the intended external benefits of less congestion, pollution, or energy consumption.

The speakers at the USC Symposium addressed this central issue from a variety of perspectives. Professor Jack Dyckman of USC's School of Urban and Regional Planning looked at the specifications of the Sunset Coast Line (SCL) superimposed on the low-density, multi-centered area of Los Angeles. He concluded that we should not expect that the SCL will provide a sensible alternative for most Southern California drivers. Dyckman also questioned whether Los Angeles had a "transportation problem," in the first place. Trip-makers are quite clever and can be expected to make rational choices that reflect their own careful assessment of costs, convenience, and time saved. In that case, they appear well served by the present system and can not be expected to switch to a mode which will have higher time costs (caused in part by the necessity of usually having to take a bus or car at both ends of the rail trip).

Professor Martin Wohl of Carnegie-Mellon University agreed with Dyckman. Both looked at the BART system of the San Francisco Bay Area, a denser population environment and a city structure that is more suited to rail rapid transit. BART'S stations are spaced closer together than the proposed stations for the SCL, yet BART is still doing poorly in ridership. BART has reduced commutation over the Bay Bridge by two percent overall and four percent during peak periods, much less than one-half the diversion that BART proponents thought their system would achieve. Professor Wohl chided the advocates of BART for not anticipating these ridership figures and questioned whether rational men can commit a mistaken investment of this proportion twice in California during a 20-year period.

Some of the other speakers provided evidence from other cities which are in harmony with this point and which contribute to a litany of unhappy results from investments in rail transit that is remarkable for its consistency. By each of these accounts, the possibilities for the SCL offering substantial diversion are bleak. Indeed, the general picture that emerges from experience in most cities is that about 85-90 percent of the ridership on the new rail transit system is derived from the bus system that it replaced. Professor Dyckman added that the existing bus system (SCRTD), already financially strapped, would thus, lose its most cost-effective routes and inherit the deficit-prone task of acting as the feeder system. Thus, more costs must be added to the anticipations that the advocates claim. Only 8-12 percent of the rail passengers are diverted from the private car. The 8-12 percent diversion, as Professor George Hilton of the University of California, Los Angeles indicated, amounts to approximately six months growth in the number of automobiles on the freeway - - a once-and-for-all diversion of traffic that is so small that it often cannot even be detected in vehicle counts. Hilton's paper added to pessimism on SCL ridership by carefully documenting the decline of Southern California's previous rail transit system. That decline was inexorable since 1923. Hilton's investigation puts to rest the allegations of the Snell Report which hold that the Pacific Electric System declined at the hands of predatory competitors. He also made the point that efforts to revitalize the P.E. would only have postponed the decline. Discussant John Rae of Harvey Mudd College added that he too became disillusioned with the P.E. System as well as other forms of rail transit for Los Angeles after becoming acquainted with the P.E.'s balance sheets and deficits.

Wohl and Dyckman also emphasized the costs of the SCL. According to the SCL's own advocates, the costs are expected to be at least $5.8 billion. Low ridership prospects suggest that future operating deficits will add to these construction costs and become a substantial drain on the local taxpayers. Wohl stressed the fact that rail transit advocates have always been in a "selling" posture around election time. As such, we know that their cost projections have almost always been low. They have budgeted for anticipated inflation but have missed the mark usually by a staggering 100-300 percent. If Los Angeles' SCL is not to become the single exception to this national record, then we should expect a construction "tab" of around $15-20 billion. Martin Wohl suggested that this increase in costs is not out of line with experience in other cities. The Washington, D.C. METRO was originally expected to cost $2.5 billion but is now estimated at $4.5 billion; moreover, the estimates of the D.C. annual operating costs increased from $32 million in 1969 to $129 million in 1976 - - an increase of about 400 percent in just six years.

It is clear that when monies are committed in one direction, we are foreclosing the use of the same resources for other options. Just what are we giving up by a commitment of the size of the SCL? Plenty, suggested Professor Ward Elliot of Claremont Men's College. The costs of a rail system in Southern California would dwarf what we have spent on the freeway system in Los Angeles (totaling about $3.8 billion). They would dwarf what we would spend by purchasing $200 million worth of more buses and supporting facilities that would carry the same number of people as would the SCL. They far exceed the $8-9 billion that it would cost to give each family in the Los Angeles an energy-efficient small car. (More on this later.)

Dyckman also suggested that a system built along freeway median lanes suffers from a double difficulty: rail lines can least compete along these popular freeway routes, and redesigning and reconstructing the freeways would drastically add to costs in the form of disruptions of well traveled routes. These disruption costs and losses of time to commuters would be so large as to swamp most of the benefits that the SCL could produce even if its patronage projections are met. It should be noted that the recently introduced Diamond Lane on the Santa Monica Freeway (an express lane for buses and cars with three or more occupants) has been widely criticized for producing disruptions of precisely the sort that the SCL would create for at least a decade on most freeway arterials.

Wohl added that no U.S. city should seriously consider the construction of new rail systems that connect suburban areas with the region's core. Likewise, existing systems should not be extended into the suburbs. Few suburbanites go to the center of the city, although many go through the center on their way to dispersed destinations for which rail delivery is so ill suited. Ever smaller numbers of commuters will be taking the trip to city centers in the future, as is witnessed by increased use of such circumferential freeways as the San Diego the Santa Monica and the Golden State, which go around Los Angeles' central core.

The plagued BART system is also an eye-opener when we combine the annualized costs of construction with operating losses in order to calculate the full cost of a ride on that railroad. BART's average cost per passenger trip is about $5.30, whereas its average fare is only $.50. The general taxpayer in the Bay Area counties that participate in BART makes up that sizable difference of $4.80 per ride, a deficit that will grow before it shrinks. The deficit is financed from sales and property taxes that tend to fall disproportionately on lower income groups while the beneficiaries of the BART subsidies tend to be higher income commuters from such localities as Concord and Walnut Creek. This provides a highly regressive wealth transfer that ridicules the benefits of rail transit to the "transit dependent" (the poor, the aged, and the physically handicapped).

The ironies contained in the proposal to build the Sunset Coast Line accumulate when one realizes that it proponents admit that ridership will be disappointing. The experts of other cities and even the forecasts of SCL advocates are low. Martin Wohl contended that these estimates may be exaggerated for "selling" purposes. The presentation at the Symposium given by Mr. Beaty of Mr. Ward's staff documents this. Beaty claimed that the SCL grew out of a quest for political expenditiousness, and that routes were designed less according to the dictates of economics and ridership than to devise an overall "package" that would be acceptable to the leadership of the many cities contained in Los Angeles County. An important reason for putting the issue before the voters in 1976, according to Beaty, was to secure the extra penny sales tax for transit purposes now before that extra tax was usurped by the State Legislature (this is widely expected to occur in 1977). Critic Harry Richardson of USC seized upon this line of argument and charged that politics had gone "topsy-turvy" in the hands of these people: they should provide that which their constituents had strong preferences for, not that which politicians claimed people ought to prefer and for which there is scant evidence that they do prefer. Richardson also scored Beaty's analysis of an energy shortage.

Political motivations were also touched on by Professor Martin Wachs of UCLA. Wachs reminded his listeners that many Southern Californians are victims of a "cultural inferiority complex": they believe that they will not have achieved true "citihood" until they, too, have a subway system. Wachs presented a well-documented case that emphasized increased bus transportation as an economical substitute for rail. He pointed out that buses on exclusive lanes (more similar to that now existing on the San Bernardino Freeway than on the Santa Monica Freeway) offer much more flexibility to riders at lower costs to the public. This researchers have known for some time, but what Wachs added was that there is much evidence that riders do not prefer the characteristics of trains to buses to an extent that justifies the enormous differences in costs. This finding is contrary to Supervisor Ward's claim, which is basic to his proposal, that Los Angeles residents simply will not vote more money for buses because they do not like to ride them. According to Wachs, riders seem to care more about basic convenience than frills: among these are speed, time saved, station location relative to residences and jobs, and simple comfort. Buses, by acting as their own feeders, are the clear winners over rail when it comes to time convenience. This finding prompted Wohl to add his recommendation that some rail lines in the U.S. be paved over to become exclusive bus lanes, since this mode offers so many more advantages in service and cost, relative to rail. Professor Vincent Roggeveen of Stanford University also endorsed Wachs' findings.

Professors Elliot and Hilton alluded to the other options available for moving people in cities. Both claimed that it is impossible to make a rational case for monopoly in taxi and bus services. Rather, deregulation, competition, flexibility, and innovation must be called upon to service trip patterns that are no longer "many to few" (typical of the rail-oriented cities in the eastern U.S.) But rather are "few to few", reflecting the new patterns of urban decentralization typified by Los Angeles, Houston, and San Jose. Jitneys, subscription buses, van pools, and other modes that we are not familiar with now would soon emerge if local legislation did not prohibit them altogether. Hilton suggested that the jitneys were, in 1915-16, a very successful way of moving people in a geographically decentralized environment. Such services are now illegal in most cities, having been put down by the public transit monopolies that were harmed by competition from them. These public transit systems, along with the franchised taxi operators, are the chief beneficiaries of the prohibition of jitneys. The public is the chief loser. A popularly cited statistic is that Washington, D.C., which allows the free entry of taxi operators, has 25 times as many cabs per citizen as does Los Angeles, which has fostered essentially taxicab monopolies in various portions of the city for more that 35 years. What is important about para-transit operations, such as jitneys, is that they do provide door-to-door service and thus are viable alternatives to the convenience of the private car trip. Thus, para-transit can compete with automobiles more effectively than could rail systems, and could actually produce some of the auto diversion that rail advocates claim to seek but have been consistently unable to deliver.

Professors Elliot and Hilton also proposed pricing of the private car trip. This proposal is consistent with what Elliot calls "full cost accounting." If the private automobile drivers are not made to pay for the pollution and congestion costs that they create by making trips on certain days when atmospheric conditions bring forth smog, then they will, of course, take too many trips at those times. This also brings forth congestion. It is important to point out that in this case, it is the driver who is rational and society's rule that the driver responds to that are irrational. In line with this thought, Elliot pointed to the advocacy by the Southern California Association of Governments (SCAG) of surcharges on automobile property taxes in order to reduce smog. Higher car licenses will tax the ownership of cars but not their use on smog-prone days and hours. Ridership itself must be taxed for the disincentive to properly work. This sentiment was echoed by speakers Bill Morgner, Norman Lane, Morris Pardue, and James Likens.

Wohl pointed out also that the citizens of Reston, Virginia - - an upper middle class suburb roughly thirty miles wet of Washington, D.C. - - have developed their own "subscription bus" service which offers close to door-to-door commutation. This system has been so popular that the service has operated at 60-70 percent capacity without reliance on public subsidies of any sort. Examples such as this illustrate that there are effective alternatives to rail transit . Ironically, these are not the expensive options: they will not cause taxes to rise further or impoverish local governments.

The conclusion that so much can be achieved for so little by non-rail options (as opposed to railroads which give us essentially little benefit at an enormous cost) must be kept in mind on election day. One of the most noble uses of academic expertise occurs when researchers are able to serve as a source of information, helping society to avoid a costly error. In this case, there was solid agreement among the experts that the correct and comprehensive predictions are not being disseminated by advocates of rail transit. They are promoting sone items which we can much better do without. Participant Harry Richardson summed this up by adapting Winston Churchills's famous remark to the situation at hand: Never in the field of human transportation will so much have been paid by many to carry so few.

An additional though incidental byproduct of the Symposium was the thought that occasionally it is the politicians who are impractical and the academics who are quite practical. Many of the former have worked to present the voters with a rail proposal that promises only high costs, overruns, tax-increasing deficits, dislocations and wasted energy resources during construction, and essentially zero benefit in the solution to any of our transportation and environmental problems. They have ignored such promising options as jitneys, better use of buses, and deregulation of taxicabs that have provided substantial benefits at little cost to citizens in many cities of the world.

As a final note, Ward Elliot's remarks remind one that the $15-20 billion projected for the Sunset Coast Line could indeed be spent in a fashion that would reduce congestion, smog, and energy consumption. Instead of purchasing a fixed rail system, a $3,000 economy sized car could be bought for each of the 3,000,000 families in the Los Angeles Basin. The total costs of this alternative project would be about $9 billion, and it could be funded at least twice with the $20 billion that the SCL will probably cost. Moreover, this proposal would drastically reduce smog, and energy use. It would accomplish its purpose, whereas the alternative rail proposal would, the conferees agreed, amount to one of the most wasteful public investments in American history.

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