Investment Priorities and Missed Investment Opportunties

Previous posts (here, here and here) have questioned the wisdom of devoting 55 percent of the over $16 billion in capital investment proposed by the RTA in its Moving Beyond Congestion Final Report to Metra (50.3%) and Pace (4.5%) when together they carry only 20% of transit customers in the region. It turns out that the RTA's own analysis of this investment results in an anemic 1.1: 1 return on investment.

Maybe the RTA knows something we don't. Perhaps some recent transit oriented development initiatives in the suburbs (e.g., here and here) have encouraged the RTA to believe that this kind of development will transform land-use in the collar counties and result in huge increases in Metra and Pace ridership. Maybe that is why the RTA is recommending shifting capital investment away from the CTA in favor of the Metra and Pace even though the CTA system appears to be falling apart, with bus and rail fleets that are too old and a rail system that is growing slow zones like kudzu.

If the RTA has this information, it certainly hasn't share it with us in the Final Report. That report notes that the "automobile-centric orientation" of the suburban areas is a major challenge for transit (pg. 21) and that "transit works best when there are large concentrations of potential users and significant concentrations of destinations where those potential users want to travel (pg. 23)." It recognizes that "there are significant areas where the density of population is insufficient to support regular [transit] service." (Pg. 23).

While the Report states that "municipalities will need to continue to encourage and support transit-oriented development (TOD) and policies that will make their communities more attractive to--and less expensive for--transit operations before transit becomes an important mode of transportation for the non-work trip" (pg. 24), the RTA fails to recommend that capital investment in transit be linked to implementation of such policies by local governments in the region.

Let's cut the RTA some slack and assume that TOD will become increasingly popular in the suburbs and that the suburbs will be somewhat more attractive to transit operations in the years ahead. Nevertheless, what are the economic benchmarks that will have to be met before heavy capital investment in expanding suburban transit infrastructure becomes more cost-effective than increased investment in the urban core of the region.

To put it another way, if the goal is to increase transit ridership then isn't the current cost of providing a transit trip the best guide to what kinds of capital investments are most likely to advance that goal. Presumably, the marginal cost of adding a new rider is less for current low cost providers than the marginal cost of adding a new rider by higher cost providers.

We demonstrated in a previous post that trips on the CTA are significantly more cost effective than trips on Metra and Pace:

Combined Capital and Operating Subsidy By Trip

CTA
$17.06

Metra
$108.75

Pace
$22.46

(Chart uses 2005 ridership, 2007 projected operating deficits and the RTA proposed 5-year capital plan in the Final Report. Note that capital cost is obtained by dividing proposed five year capital plan amounts by 2005 ridership and may not accurately reflect actual capital costs.)

This data suggests that if the goal is to increase transit ridership, investing in CTA and Pace service is the most cost effective approach. Why spend over $100 per new trip by investing in Metra when the same investment might yield over five new trips on the CTA or Pace?

One can argue, however, that the focus on trip share is misplaced. Rather, the region's goal should be to maximize the number of miles traveled by transit in the most cost-effective manner. What is the combined operating/capital costs by passenger mile:

Combined Capital and Operating Subsidy By Passenger Mile

CTA
$4.06

Metra
$5.41

Pace
$3.04

This analysis suggests that Pace offers the best investment opportunity to get people to rack up more travel miles on transit.

Neither analysis indicates that the RTA proposal to concentrate capital investment on Metra projects is the most cost effective way to generate new transit riders or new passenger miles by transit. Why then is the RTA proposing that Metra's capital share be over three times Metra's ridership share when the data show that Metra is the least cost-effective way to achieve those goals?