Public Expenditure Analysis May 4, 2007 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 8 th worst nationally for travel delays I-90 / I-5 interchange is 18 th 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: 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, (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%