Cost-Benefit Analysis: Seattle Link Light Rail, Initial Segment Your presenters: Annie Gorman Hazel-Ann Petersen Public Expenditure Analysis May 4, 2007

“…to improve mobility within the urban areas by providing travel alternatives so they may grow comfortably while preserving rural areas for future generations." Public Expenditure Analysis May 4, 2007

Presentation Agenda Background Costs Benefits Reconciliation and Conclusions Public Expenditure Analysis May 4, 2007

Background Public Expenditure Analysis May 4, 2007

Context Regional light rail, with 40 miles of track, by 2030? Initial segment is 13.9 miles long, reaches from downtown Seattle south almost to the airport Monorail vs. light rail Public Expenditure Analysis May 4, 2007

Big Plans for Light Rail Public Expenditure Analysis May 4, 2007

Traffic in the Seattle Area WSDOT 2006: Longer travel times, slower speeds, longer congestion peaks, less reliable travel time Seattle-Tacoma 8th worst nationally for travel delays I-90 / I-5 interchange is 18th worst bottleneck nationally Regional population, especially in non-urban areas, growing over 5% per 5 years Public Expenditure Analysis May 4, 2007

Project Costs Public Expenditure Analysis May 4, 2007

Original vs. Projected Budget Discrepancy is over 100% Public Expenditure Analysis May 4, 2007

Operating Expenses Actual Operating Expenses show larger growth than other transit activities while Fare Revenues also show lower growth. Public Expenditure Analysis May 4, 2007

National Expense Averages Source: http://www.soundtransit.org/x1190.xml Recovery ratio (also known as working ratio) is the percentage of operating funds applied (operating expenses) paid through fare revenues. Public Expenditure Analysis May 4, 2007

Cost PV of Funding Sources At Various Discount Rates Public Expenditure Analysis May 4, 2007

Operating Profit for Link Lowest Across All Modes Public Expenditure Analysis May 4, 2007

Projected Funding Cost PV: Negative Public Expenditure Analysis May 4, 2007

Operating Expenses By Mode, 1996-2005 (National) Public Expenditure Analysis May 4, 2007

Nationally, Bus Remains Most Popular Transit Mode Public Expenditure Analysis May 4, 2007

Project Benefits Public Expenditure Analysis May 4, 2007

Benefits (Non-costs) Fuel costs and vehicle non-depreciation Other transportation costs (road capacity and parking) Time spent commuting Social costs: pollution, accidents, etc. And a benefit: revenue from paying riders Public Expenditure Analysis May 4, 2007

Baseline Assumptions Ridership and segment distribution Bus capacity Work days per year Gas price Commuting distance Hourly wage Parking cost Value of commuting time What social costs to include At what level to value them Fare contribution per person Rate of increase/ decrease of ridership Public Expenditure Analysis May 4, 2007

Baseline Scenario Revenue contribution $2.8 million* Total Y1 benefits $24.8 million* Total NBV $423 million* * in 2007 dollars, 6.5% interest rate Public Expenditure Analysis May 4, 2007

Sensitivity Analysis: Other Scenarios More riders Fewer riders Red Meat Granola Oil Price Spike Equal Time Value Six Miles Range: $23.4 M – $31.9M, 2007 dollars Public Expenditure Analysis May 4, 2007

Cost/Benefit Reconciliation Public Expenditure Analysis May 4, 2007

Issues to Address Costs: 3 funding scenarios Benefits: 8 situational scenarios Costs: in 1999 dollars Benefits: in 2007 dollars Public Expenditure Analysis May 4, 2007

Full Reconciliation Range: ($2.71) bn – ($3.22) bn Public Expenditure Analysis May 4, 2007

A Hypothetical Break-Even Scenario Initial ridership = 16,000 (200% increase) Ridership growth rate = 10% (333% increase; this means 53,820 riders daily in 2030 vs. 7224) Per-gallon gas price = $9.78 (323% increase) Average hourly wage = $100 (617% increase) $ Public Expenditure Analysis May 4, 2007

Conclusions Likely NPV is ~ ($2.95) bn in 1999 dollars, ~ ($5.2) bn in 2007 dollars Getting to break-even requires wildly improbable new assumptions Mass transit isn't worth it on paper Public Expenditure Analysis May 4, 2007

BACKUP SLIDES Public Expenditure Analysis May 4, 2007

Change In Profitability W/r/t Discount Rate of 10% Public Expenditure Analysis May 4, 2007