TESTIMONY December 1, 2015 TESTIMONY REGARDING THE USE OF COUNTY MASS TRANSIT FUNDS FOR LOOP TROLLEY CONSTRUCTION COST OVERRUNS By Joseph Miller Testimony Before the Saint Louis County Council To the Honorable Members The Loop Trolley project is an effort of this Council: to construct a 2.2 mile vintage streetcar (or trolley) line from the My name is Joseph Miller, and I am Saint Louis History Museum, located a policy analyst for the Show-Me in Saint Louis City, to the intersection Institute, a nonprofit, nonpartisan of Princeton Avenue and Delmar Missouri-based think tank that Boulevard in University City. Recently supports free-market solutions for the St. Louis Post-Dispatch reported state and local policy. The ideas that the Loop Trolley project had presented here are my own. This exceeded its original construction testimony is intended to summarize cost estimate of $43 million by research performed by Show-Me $8.4 million, an increase of about Institute analysts and researchers 19%.1 To ensure that the project regarding the transportation and can be completed, the Loop Trolley development merits of low-speed light Transportation Development District rail projects, as well as the efficient now seeks aid from Saint Louis revenue collection for transportation- County. The specific proposal before related projects. this council would:2 ADVANCING LIBERTY WITH RESPONSIBILITY BY PROMOTING MARKET SOLUTIONS FOR MISSOURI PUBLIC POLICY SHOW-ME INSTITUTE I TESTIMONY …appropriate funds from the a local match for $5.4 million in frequency Public Mass Transit Trust Fund, Surface Transportation Program Proposition A transportation sales (STP) funds. • Passenger facility tax receipts, to the Loop Trolley improvements in fare Transportation Development Proposition A funds, which are collection, etc. District “(“Loop Trolley TDD”)” derived from a ½ cent countywide for the purpose of completing sales tax, are to support public • MetroLink expansion construction of the Loop Trolley transportation projects in the Saint • project in St. Louis County and Louis area. The proposition’s primary Bus rapid transit the City of St. Louis, as indicated, purpose was to restore bus service improvements stating the Loop Trolley TDD that had been cut in 2009. Other Voters were told that Proposition has requested an amount of goals include:3 A funds would go to projects that $3,000,000 from the Proposition would improve transportation, A transportation sales tax • Increased MetroBus provide savings to users, and reduce receipts… frequency congestion.4 This $3 million would be used as • Increased MetroLink 2 December 1, 2015 The Loop Trolley’s merits as a public million, the high-end estimated However, it is possible that the transportation project are limited cost of purchasing two buses to run aesthetic appeal of the trolley will at best. The Loop Trolley’s route along the same route is only about draw people to the Delmar Loop, would serve one of the best-served $1.4 million.10 Even assuming those and more businesses to the area transit corridors in Saint Louis City buses were replaced every 7 years around the tracks, regardless of its and County. The trolley’s footprint and trollies require no replacement transportation merits. If this were is intersected by seven MetroBus (or major repairs) for 30 years, the to be the case, it would mean that routes and passes within a few meters Loop Trolley would be 10 times as the Loop Trolley’s primary effect is of two MetroLink stations. No part expensive as adding buses. not improved transportation, nor of the current route is unserved are its main beneficiaries the public by transit, as the map of the Loop The stronger case for the Loop transportation users of Saint Louis Trolley’s routes (see previous page) Trolley, and for streetcars in general, City and County. Rather, it would demonstrates.5 is that they may spur development. mainly create aesthetic appeal and This is a generally accepted view even benefit local property owners and The project’s slow speed and limited among streetcar/trolley proponents, Delmar Loop visitors. It is therefore range compare poorly to readily including the main backers of a questionable use of limited regional accessible bus and light rail options the Loop Trolley.11 Whether or transportation dollars. in the area, and its antique trolley not streetcars actually create new cars are easily outmatched in terms development is a matter of debate. In its original budget, the Loop of speed and range by both buses and Streetcar projects are often coupled Trolley derived the majority of the MetroLink (see the table below). with large, publicly subsidized, urban its funding from the federal regeneration projects that may be government and regional STP These factors suggest that the Loop the causal factor for development funds.13 (see chart on page 4) Trolley will be a redundant, if not in cities where streetcars have been inferior, public transportation option completed.12 As a review in the Unlike the proposal before this for nearly all conceivable transit Economist put it: council, the original funding trips. As for other factors, such as plan called on the Loop Trolley congestion mitigation, even the Loop The relationship between streetcars Transportation Development District Trolley’s own environmental impact and development is not clear, say (TDD) and Great River Greenways study stated that, researchers funded by the Federal to cover the local match for federal Transit Administration (FTA). STP dollars. The remaining funding “The Build Alternative would not In cities where streetcars have for capital expenses was to be covered result in any direct congestion or led to urban renewal, they are by tax credits, private donations, and safety impacts.”9 part of larger, heavily subsidised city tax dollars diverted through TIF development plans, with changes monetization. The Loop Trolley may increase in zoning, improvements to streets transportation options between the and other upgrades. And while As Saint Louis County is currently Saint Louis History Museum and streetcars are cheaper than other exploring improvements to its bus the Delmar Loop neighborhood, rail projects, they are still costly to system, including bus rapid transit, any but building a low-speed light rail build and maintain. Operating decision to use dedicated county transit line is not cost effective compared expenses are more than twice those funding on the Loop Trolley, which to providing additional regular bus for buses, according to data from it does not currently use, should take service. While the total capital costs the FTA, and capital costs are hefty. into account the opportunity costs of of the Loop Trolley will exceed $51 depriving other projects of support.14 The grant that Saint Louis County is being asked to match is a federal 3 SHOW-ME INSTITUTE I TESTIMONY at the expense of county transit funding. If the local area taxes and trolley rider fares cannot be expected to cover the $3 million match, Saint Louis City and Saint Louis County could also consider funding the shortfall out of their economic development budgets, not their dedicated transportation funding. To conclude, the Loop Trolley Project has little transportation merit. Its main purpose is local development, not transportation improvement. As such, the project’s $8.4 million cost overruns would be better handled by the direct beneficiaries of the project, such as local property owners and visitors who use the STP grant, which the county would have drawbacks, especially with regard trolley. Using Proposition A funding, have little trouble obtaining for other, to transparency and accountability. passed primarily to improve public more worthy purposes. In fact, the Using TDDs and CIDs makes it easier transportation in the Saint Louis county has received 96 STP-S grants for local interests to increase taxes region, is less justifiable. for projects to be undertaken over the (usually sales taxes) for favored projects, next four years, mostly for local street with potential taxpayers strategically improvements. cut out of the voting district. However, in this case a TDD already exists and Given both the development goals and charges a sales tax, and the trolley Joseph Miller is a policy analyst at the likely beneficiaries of the project, it project it funds is already under Show-Me Institute may be more appropriate that property construction. Therefore, while avoiding owners within the Loop Trolley’s use of a TDD may have been better footprint and trolley users increase from the offset of the project, the their financial commitment to the existing TDD might be the best option project to cover the $3 million match for handling the current cost overruns. for federal funds. For instance, the existing TDD only employs a 1% sales Furthermore, the Loop Trolley’s fare tax, which is mainly planned to fund is projected to be only $2 per regular 15 operating costs for the trolley. The passenger ($1 reduced fare).16 That TDD could implement an additional is equal to the MetroBus fare and property tax in the district to help pay less than the MetroLink fare. The for cost overruns. Business owners in proposed fare could be increased, the Loop Trolley area could also create with anticipated revenue bonded to community improvement districts cover cost overruns. Given the ready (CIDs), which could raise property availability of other transportation taxes to fund the shortfall in the Loop options in the area, there is little Trolley project. The use of micro taxing justification for providing a heavily districts like TDDs and CIDs does subsidized fare on the Loop Trolley 4 December 1, 2015 NOTES 7 Chung, Payton. “11 Simple Ways to 14 East-West Gateway. Speed Up Your City’s Buses.” http:// “Transportation Improvement 1 Thorsen, Leah. “Loop Trolley cost usa.streetsblog.org/2014/04/18/11- Program: 2015-2018.” http://www.