What Fort Worth’s Political Class Means by ‘Financially Viable’

A recent study funded by the city of Fort Worth concluded that streetcars would be “financially viable,” said a Fort Worth Star-Telegram article.

Granted, part of the problem with this claim is the source of the funding for the study in the first place. The consulting firm, HDR Engineering Inc., is widely known for government transit planning and has a reputation to maintain among government bodies. If HDR began releasing findings that predicted the overall unfavorable consequences of government meddling, then HDR might begin to receive fewer government contracts.

Making this even more suspect, the original source of funding for the Fort Worth study came from the Regional Transportation Council, an arm of the North Central Texas Council of Governments (NCTCOG), totaling approximately $1.6 million. Nearly one million dollars went to HDR. For those who do not already know, the NCTCOG has been on a tear in recent years to push for tolled lanes on existing free highways and for an extension of existing government-managed mass transportation.

So is it any surprise that the city council of Fort Worth and the NCTCOG got exactly what they paid for?

Purely from an economic perspective, if HDR’s studies empirically proved that a profit was to be had, then it stands that private investors, not their political handmaidens, would be thrilled to invest in streetcar transportation. In fact, this was the case in Fort Worth prior to the city government refusing to renew the franchise of the Northern Texas Traction Co. prior to World War II. Even businesses along the bus routes might be willing to invest if they were convinced it would boost sales.

The truth is that government-managed transportation systems are fatally flawed from a moral and practical perspective. Just in Tarrant County, the government-managed mass transportation system lost over $65 million [PDF] dollars for each of the past two years, costing $11 in taxes for every dollar it generated in revenue from riders.

There are also fundamental problems with the study itself. The way HDR projected future revenues for prospective streetcar routes was by studying how many passengers were willing to take free rides on buses decorated as old-fashioned trolleys.

Whereas approximately 132,000 rides per year were taken on free Molly the Trolly buses, the city predicts a ridership of over 1.3 million per year on a single paid streetcar route. They expect ridership to increase ten-fold after charging more. I am not kidding [PDF]. Even those figures do not give the full picture, because HDR is making these claims based on a projected $26 million federal grant the city would receive to help pay for construction of one or more lines.

Part of their thinking is that Molly the Trolly is twice as popular as the traditional bus service, so actual streetcars would be even more popular. But what accounts for some of the popularity of the Molly the Tolly buses is that they are free to ride.

That leaves us to conclude that these streetcars are “financially viable” in the same sense that home invasions are viable to a thief so long as he does not get caught.

Here is the deal. The inevitably massive losses will be recouped in money collected through property taxes. An earlier assessment, when the plan was just half the track length as currently devised, found that streetcars would cost $3 million more than they collected in fares. Within 15 years, however, HDR’s project manager predicted that property values will increase by an additional $900 million along the “influence zones” of one of the proposed routes. That means additional property values could be sucked up by the tax eaters in the Fort Worth city government. As HDR’s project manager said, this is “fundamentally an economic stimulus project.”

By using the project to divert investments and wealth to politically favored upscale condominiums and business districts, city planners are making affordable housing and small-business entrepreneurship for the poor and middle class even further out of reach under the pretense of government-managed sustainable development and “smart growth.” Government authorities are not looking at the unseen consequences of their actions. The projected property value increase are being generated by removing economic opportunity from businesses with a longer outlook on things than the next election or administrative promotions elsewhere.

Image credit: Igal Koshevoy, with a Creative Commons license