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

2. “…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

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

4. Background
Public Expenditure Analysis May 4, 2007

5. 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

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

7. 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

8. Project Costs
Public Expenditure Analysis May 4, 2007

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

10. 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

11. 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

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

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

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

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

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

17. Project Benefits
Public Expenditure Analysis May 4, 2007

18. 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

19. 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

20. 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

21. 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

22. Cost/Benefit Reconciliation
Public Expenditure Analysis May 4, 2007

23. 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

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

25. 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

26. 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

27. BACKUP SLIDES
Public Expenditure Analysis May 4, 2007

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