North Shore ConnectorCost-Benefit Study of Extending Pittsburgh

Light Rail Transit to the North Shore

Parshwanath AdirajaDan Concepcion

Nicolas Zitelli

April 28, 2004

North Shore Connector

• Project Details

• Costs

• Benefits

• Financing

• Conclusion

North Shore Connector will extend LRT 1.2 miles

Source: Port Authority of Allegheny County

1.2 miles0.3 miles

North Shore Connector strategy entails three major goals

VISIONMore effectively link the Pittsburgh central business district with the North Shore area

GOALSEnhance accessibility to major sports, cultural, and civic facilities

Improve linkage between North Shore fringe parking and Golden Triangle employment centers

Facilitate economic development in the Pittsburgh North Shore

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

Current Light Rail System Data

Current Data

• 7.5 mil. boardings per year

• Approx. 20,500 boardings/day

• $1.25 peak/$1.75 off-peak

• Estimated “T” revenue = $11.25 mil. per year

Source: Port Authority of Allegheny County

Ridership expected to begin by 2008

North Shore Connector complete

Full Funding Grant Agreement in FY 2005

federal budget

Final design and engineering

Construction begins

2003 2004 2005 2006 2007 2008

Source: Port Authority of Allegheny County

Costs

Assumptions

• 30 year timeline (2004-34)

• Construction from 2004-08

• Discount rate = 7%

• Figures include 0.3 mile Convention Center spur

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

Operating Other

Capital

Costs

Capital Costs

Capital Costs = $362.8 mil

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

Operating Costs

Operating Costs = $8.5 mil/year

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

Other Costs

• Environmental

• Disruption

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

Total Costs

$362.8 mil Capital+ $8.5 mil/year Operating

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

= $411.9 mil Total (NPV)

Benefits

Assumptions

• 30 year timeline (2004-34)

• Ridership begins in 2008

• Discount rate = 7%

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

Operating

Other

Benefits

Operating Benefits

Ridership = 16,100 boardings/dayAverage fare = $0.89/trip

Time saved = 8 min/tripAverage wage rate = $33,837/year

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

Operating Benefits = $175.9 mil (NPV)

Other Benefits

Economic development

Access to North Shore

Downtown access to commuter parking lots

North Shore redevelopment will take place with or without LRT extension

There is already existing PAT bus service

Parking lots on North Side have existing shuttle service to downtown

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

Total Benefits

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

$175.9 mil Operating+ $0 Other

= $175.9 mil Total (NPV)

North Shore Connector will have a negative NPV

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

$175.9 mil Benefits (PV)- $411.9 mil Costs (PV)

= -$236 mil Total (NPV)

Project needs a discount rate of -2.1% to break even

$(300,000,000.00)

$(250,000,000.00)

$(200,000,000.00)

$(150,000,000.00)

$(100,000,000.00)

$(50,000,000.00)

$-

$50,000,000.00

$100,000,000.00

Discount Rate

NP

V

Federal80%

State17%

Local3%

Federal, State, and Local government money will finance capital costs

Source: Federal Transit Administration, New Starts Report – Stage II LRT Construction (Pittsburgh, PA), Nov. 2003

$290.3 mil Federal (Grant)+ $60.5 mil State (Appropriations)+ $12.1 mil Local (Appropriations)= $362.9 mil Total Funding

Look Familiar?

Opportunity Costs

• Operating Budget of Pittsburgh

= $338 mil (2004 estimate)

• Expenditures on general services

= $22.29 mil (2004 estimate)

• Pennsylvania’s expenditure on cost of premiums for Medicare participation

= $14.2 mil

Conclusion

• LRT ridership expected to increase 78% because of North Shore Connector

• Government funding should cover capital costs

• Revenues from fare and other sources need to cover operating costs

• Other benefits (apartments, offices, retail) might arise from North Shore Connector