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Streetcar Proposal: Comparing Boise's dream with Little Rock's reality, Part 2

Streetcar Proposal: Comparing Boise's dream with Little Rock's reality, Part 2

October 7, 2009
October 7, 2009

In Part 2 of this series, we’ll look at the projected numbers of both Little Rock and Boise’s streetcar systems, and how they’ve shaken out five years later. We’ll compare how the Little Rock River Rail is financed, and how Boise would finance its proposed streetcar system. Finally, we’ll look at how development and business has evolved in Little Rock since November 2004, when the River Rail went into operation.

In 1999, the Federal Transportation Administration did a study, and projected the Little Rock River Rail would carry a price tag of $13.2 million in capital, or construction costs, and $700,000 in annual operating costs. It predicted a weekly ridership of 1,000 passengers. The Boise Streetcar Task Force says our system would cost about $60 million to build, and have operating costs of one million to a million and a half per year. Predictions are 8,400 to 11,200 people would ride the trolley per week, mostly because there would be no fare charged.

Five years later, the River Rail has come pretty close to projections in terms of operating expenses. Since 2004, $3.5 million dollars have gone to the River Rail, $313, 673 (roughly 9%) of which has been recouped through fares of one dollar per adult and 50 cents for kids under 12. Capital costs, though, came in at $28 million…a whopping 112% increase from projections. This amounts to about $8 million for each of the River Rail’s 3.5 miles of track and cable, and its five trolley cars. Ridership is also higher than predicted, with close to 3,100 people riding the streetcar per week. That works out to $31.5 million over five years to serve about 800,000 riders, or about $39 each.

Granted, there are variables such as inflation, labor and materials costs, etc., which always seem to run the cost of projects over and above projections. But 112%?

If the Boise streetcar project saw similar 112% inflation, it would cost $127,200,000 to build. Given that the planned system would be a 2.3 mile loop (served by three trolleys); the price works out to $55.3 million per mile. A three-fold increase in ridership over projections, as Little Rock experienced, would equal 33,600 riders per week, given Bieter’s 1,600 per day figure. Add in five years of operating costs (and we’ll use the lower projection of $1 million per year), and we come up with a five-year price tag of $132,200,000 for 8.73 million riders, or roughly $15 each…is that a bargain or what?

All this brings up a number of questions: Why is Boise’s 2.3 mile, three trolley system projected to cost $32 million more to build than Little Rock’s 3.5 mile, five trolley system? Why would Boise’s smaller route cost $300,000-800,000 more annually to operate than the larger, more complex Little Rock River Rail? Can Boise control costs so as to avoid that pesky 112% inflation? If Little Rock’s streetcar draws only 3,100 riders per week, most of whom are visiting the tourist attractions we discussed in Part 1, is it realistic to believe as many as 33,000 riders would use Boise’s trolley system every week? Is $15 dollars per rider really a good investment of taxpayer dollars? These are only a few of the questions that should be asked of Boise city officials.

Funding the Project

Now let’s take a look at how Little Rock’s system is funded and how Boise’s system would be paid for. In either case, taxpayers and consumers foot the bill; the only difference being how much comes from federal, state and local sources.

80% of the cost to build the Little Rock River Rail came from federal grants, and the rest from a combination of state and local funding. The Idaho Freedom Foundation spoke with Pulaski County (Arkansas) Judge Buddy Villines, who was one of the driving forces behind bringing the River Rail to Little Rock and North Little Rock (under Arkansas law, the county judge is the CEO of his or her county). He told us that property taxes were not increased to pay for the streetcar. Rather, the other 20% came from state and local general fund dollars, as well as funds from the state Roads and Bridges budget. Similarly, an 80/20 combination of federal, state and local funding pays the system’s annual operating cost. The River Rail charges a modest fee to ride the streetcar, which returns roughly 9% of the operating cost to the Central Arkansas Transit Authority.

Boise’s system would be 2/3 funded by a $40 million federal TIGER (Transportation Improvement Generating Economic Recovery) grant, and since Idaho has no mechanism by which state funds could be used, the rest would come from either a bond issue, or the creation of a Local Improvement District (LID). All properties within a three block radius of the trolley route would fall within the LID. According to Boise Streetcar Information, annual operating costs would come from advertising and sponsorships, increased parking fees, general fund money and taxing district revenues.

While taxpayers across the nation are, or would be footing at least part of the bill for both systems, in Little Rock’s case, at least the misery is spread a little wider. Federal taxpayers have shared and continue to share 80% of the burden of Little Rock’s construction and operating costs. But for Boise’s streetcar, federal dollars will pay only 2/3 of the construction, with the rest coming from the taxpayers of Boise (and all of this doesn’t even take into consideration the ethical question of, is it right to ask the people of Arkansas to help pay for Boise’s trolley, and vice versa). Boise's taxpayers and property owners will also pay all of the operating costs, and that very well could add up to higher taxes and/or prices for everyone.

Do you think that because you live outside the LID, you won’t be affected? Well, do you do business downtown? Do you park in any of the downtown parking garages? Do you go to Steelheads or Burn games? Do you like to catch a show at the Egyptian, or a band at Hannah’s? You could find higher prices for everything downtown, from coffee to coats, from sandwiches to Steelheads tickets, as business owners pass along the price of their increased taxes and rent to you, the consumer. Do you think that because you rent your condo, apartment or house in the LID, you won’t have to worry about those pesky higher property taxes? Maybe you won’t…unless, of course, your landlord decides to pass that additional burden on to you, in the form of higher rent.

It's built...did they come?

We talked with Mac Watts, the long-time general manager of a downtown Little Rock restaurant. He says he has seen development and investment coming in over the last few years…mostly in the form of high-end condominiums. While his property taxes haven’t gone up, his rent has. That added burden, heaped atop the challenges of the recession, has him struggling to keep his doors open. He’s not alone, either. Watts says many other business owners in downtown Little Rock and North Little Rock are hurting, and some are on the verge of closing altogether. “The trolley hasn’t done as well as they hoped,” Watts says, “and it’s not recession insulation.”

But, “build it and they will come”, right? Not necessarily. While there has been some development and investment downtown, the Greater Little Rock Chamber of Commerce says commercial and residential development in the western part of Little Rock, an area known as Chenal, has exploded. So if the belief is that the presence of a trolley alone will attract new development and investment, that’s not really borne out so well in Little Rock…and they have a presidential library.

Questions and answers

Many questions need to be asked of Boise city officials, and honest answers need to be given. Is Little Rock’s streetcar truly successful, if it costs $40 per rider to provide the service? Would Boise’s streetcar be a value at $15 per rider? Has the economic development and investment in downtown Little Rock and North Little Rock come as the result of the trolley system, as Mayor Bieter believes, or because of attractions like the Clinton Library, the River Market, Dickey-Stevens Park, and Verizon Arena? Considering the burden higher rent alone is placing on businesses along the River Rail routes, would downtown Boise businesses be able to shoulder the load if both taxes and rent shot up?

So, when Mayor Bieter asks, “can we afford not to build a streetcar?” the answer is “maybe and maybe not”.  A lot of other questions have to be answered first, but the property owners and taxpayers of Boise have to ask them first.

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