Unaffordable Options

 

 

"Can we afford them? Not really. Do we like them? Some do. Are they trendy? ABSOLUTELY!"

When I went to my last reunion, it really did seem like I graduated from high school so long ago, it was in another lifetime. Now that I have been retired for six years, it is starting to seem the same with my working life. Why do I say that? No matter which company I have worked at, they all had the same goal - sustainability. They would not embark with any new product development or service unless it would eventually be sustainable and make a profit for the company.

Yesterday in our local weekly paper, the guest columnist had an article about how important it was for Betsy and the evil empire (Met Council) to bury the hatchet and get going on the Southwest Light Rail Line. The cost of this thing has gone up like a Roman Candle and continues to do so every month it is delayed. But who cares? It will never be sustainable, it will never pay for itself. Why should be expect anything different? The Hiawatha Line is a loser, the Green Line is expected to be a loser, and the Northstar for sure is a loser.

In the real world that most of us work in, people would be fired for implementing a project that would never break even. The shareholders would expect nothing less. However in the make believe world of government, who cares? If the LRT never breaks even, we will just raise taxes to pay for someone else's ride. In fact, I still doubt any true analysis has taken into consideration the TCO (Total Cost of Ownership) costs of any of our train lines. TCO covers ALL costs such as legal, eminent domain, construction, bonding costs, annual maintenance, labor and so on. Usually start up costs are amortized over a period of time for pay back. However, if the project is never expected to operate in the black, this amortization could stretch "to infinity and beyond!"

Back in January of 2012, Dave Osmek penned an Op Ed for the local newspaper and discussed this topic. It was undoubtedly very unpopular with many as it was dripping with facts, and not hyperbole.

"Using the Met Council's 2010 report, the cost of just a single ride on the Hiawatha light rail line is $2.46. Riders pay on $.99 of this cost, leaving almost 60% of the cost to be subsidized by the public. But this is NOT the true cost of an actual ride, as it does not include the 30 year amortized costs of bonding for the build-out of the line. Adding those costs in at a 4% bond interest rate, a single ride actually costs $6.42, which means each ride is subsidized by 85%. If a family of four rides the Hiawatha line to a Twins game, the public is paying a total of $43.36, while the riders are contributing $3.96.

If the Southwest Line ever comes to fruition, the numbers will be even worse. Why? The projected cost of this project are now almost $2B and growing. But who cares? Most in the public are sound asleep when it comes to real costs, and besides all of which - trains are trendy! Since (unlike in business) we never "take the temperature" on projects once they are started, we really have no idea how much municipal projects cost. Stadiums, trains, who cares? It is after all, only money.

The next time I ride the Northstar (if there is a next time), I am tempted to write a letter to the editor thanking the public for their generosity in helping pay for the ride. Actually, it is more than just helping - I will pay so little of the actual cost, I will be a freeloader. All aboard!