Commentary

MN’s Costly Northstar Commuter Rail Subsidies

This morning David Levinson, Associate Professor in the Department of Civil Engineering at the University of Minnesota, posted a detailed criticism (available here) of the Northstar Commuter Rail in Minnesota (via Marc Scribner).

He highlights three increasingly optimistic benefit-cost (B/C) analyses that were used to justify construction of the Northstar Commuter Rail. In 1998 Parsons-Brinckerhoff calculated a .26 B/C ratio for the line; in 2002 the Minnesota Department of Transportation (MnDOT) calculated a .84 B/C ratio; and finally in 2003, Anton, Lubov & Associates calculated a 1.15 B/C ratio.

Despite optimistic predictions, “ridership on the Northstar Commuter Rail will be 20% less than forecast in its first year of operation,” and low ridership is proving costly to Minnesota taxpayers. According to Levinson,

If current ridership holds (979 persons using the line (round-trip) per day (on a 365 day year)), this amounts to a $275,664 capital cost per person. On a per day basis: $61 round-trip capital cost and $28 round-trip operating cost. Or $89 per person. Fares are up to $7 one-way or $14 round-trip. Assuming most trips pay the full fare (which they don’t), the daily subsidy is about $75 per day per rider [emphasis added].

Levinson describes the wide gap between predicted B/C ratios and actual ridership as “(‘strategic misrepresentation’) quite common in the transit promoters’ world.”

Earlier today my colleague Adam Summers discussed similar strategic misrepresentation issues facing California’s high-speed rail project with the National Center for Policy Analysis (available here).

Harris Kenny is a state and local government policy analyst at Reason Foundation, a non-profit think tank advancing free minds and free markets.

Harris has worked alongside policymakers in Colorado, Texas, Florida, North Carolina, Arizona, Oregon and elsewhere to implement public policy solutions. Harris is currently serving as a member of the Local Authority Working Group of Colorado Governor John Hickenlooper's Amendment 64 Task Force, which is providing guidance on implementing recreational marijuana legalization. He conducts research on public finance, public-private partnerships, privatization, public safety, criminal justice and regulatory policy issues.

Harris has appeared on various television and radio outlets, such as National Public Radio, HuffPost Live, Al Jazeera, Voice of Russia and Colorado Public Television. His writing has been published in The Wall Street Journal, The Denver Post, The Sacramento Bee, The Orange County Register, Real Clear Markets, reason.com, and other print and online outlets. He also serves as co-editor of Reason Foundation's Annual Privatization Report (reason.org/apr) and Innovators in Action (reason.org/innovators) publications.

Prior to joining Reason Foundation, Harris worked at the Los Angeles Economic Development Corporation. He earned a BA in Economics from Pepperdine University, where he worked as a research assistant to Dr. Luisa Blanco at Pepperdine University's School of Public Policy.


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