Why can't America build trains?

A guest post by Eric Goldwyn.

Modern America’s economic problems often stem from excess costs — health care costs, housing construction costs, child care costs, and so on. And one of the most glaring things that America can’t seem to build efficiently is passenger rail. Cheap, efficient, convenient train systems are the pride of countries like Japan, France, Switzerland and South Korea. But for some reason, America can’t seem to build anything like these systems. And when we actually do try to build trains, it ends up costing ridiculous amounts per mile — more than 20 times as much in NYC as in Seoul.

A few intrepid scholars are trying to find the root of America’s cost problem. The Transit Costs Project, headed by Eric Goldwyn, Alon Levy, and Elif Ensari, is at the forefront of these efforts. In addition to researching the sources of America’s bizarrely high costs, they’re also creating a plan to deliver high speed rail along the Northeast Corridor for less than $100 billion. So I asked Eric, who is a an assistant professor and program director of the Transportation and Land-Use Program at NYU Marron, to write a guest post explaining what his team has found so far.

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Why is it so expensive to build rail in America?

In 2011 and 2012, voters in North Carolina’s Durham and Orange counties approved half-cent sales taxes to fund multiple transit projects, including a new 17.7-mile, 18-station light rail connecting the University of North Carolina, Duke University, and North Carolina Central University known as the Durham-Orange Light Rail. After expending $157 million and never laying one foot of track or gaining a coveted $1.25 billion Full Funding Grant Agreement from the Federal Transit Administration (FTA) to reimburse planning, engineering, and design expenses and help pay for construction, GoTriangle discontinued the project in 2019.

Typically, before a transit project receives funding from the FTA, according to FTA guidelines, the project sponsor must sign cooperative agreements with key stakeholders, such as utility companies and major property holders. By committing to a project publicly before securing these stakeholder agreements and the funding needed to complete construction, essentially what all transit projects seeking funding via referenda end up doing, stakeholders—or less generously NIMBYs—are able to slow down projects, extract benefits, or, as in the case of the Durham-Orange Light rail, kill it.

Just as UNC’s Caleb Love’s tee-shirt worthy three pointer in the final seconds of the 2022 Final Four dashed Duke’s hopes of writing Coach K a fairy tale coda to his Hall of Fame career, Duke derailed the Durham-Orange Light Rail just as GoTriangle was closing in on a federal grant by refusing to sign a cooperative agreement. Duke claimed that it was concerned about construction vibration, potential utility disruptions, electromagnetic interference from the trains, and legal liability. Without Duke’s approval, approval GoTriangle courted aggressively, there were no viable pathways to secure federal funding, which in turn made it impossible to pursue the project without new funding or restarting the design process and altering key elements.

Our longstanding interest in these issues and stories like this and more infamous ones about multi-billion dollar subway projects in New York or the ongoing saga in the Bay Area or Honolulu motivated our Transportation and Land-Use group at NYU Marron to launch the Transit Costs Project and research the challenges and cost drivers of transit projects. We compiled a database of more than 600 projects across nearly 60 countries to calculate basic descriptive data on high-capacity transit projects. In examining the data, we quickly saw that the news reports were onto something: subway projects in Los Angeles cost three-and-a-half times more, on a per mile basis, than subway projects in Stockholm. San Francisco’s Central Subway is on track to cost five times as much, on a per mile basis, as Seoul’s Line 7 extension. More relevant, however, we also saw that there were no easy explanations to understand these differences, such as costs increase as GDP per capita does. Without a good way to make sense of our data, we decided to dig more deeply into specific projects and conduct in-depth case studies around issues that emerged in other studies and in news media accounts, such as governance, agency capacity, procurement, labor, design, and regulations. For the purposes of this post, I want to focus on governance.

Who decides?

Governance, who decides, or, more likely in the case of a domestic transit project, the uncertainty over who decides, sits at the heart of all of these significant challenges. Without champions fighting for projects and ensuring there is good oversight, transparency, and public accountability, projects are inevitably shaped by those who actively seek to shape them. In the case of the now defunct Durham-Orange Light Rail, Duke assumed a central voice in the process, supplanting the voice of the elected representatives of the voters who approved multiple sales-tax increases to support the overall program. As such, Duke had enough power to withhold its support and cite shifting unmet demands, all while “enthusiastically supporting” transit, as an excuse to subvert voter-approved plans in Durham and Orange counties. GoTriangle did try to meet these demands, it even agreed to elevate a portion of the right-of-way, an estimated $90-$115 million cost increase, to allay Duke’s concerns about access to its hospital and utility relocation risks. Without an ally willing to stand up to Duke, say a sitting Governor, GoTriangle had no choice but to cancel the project. Unlike transit agencies that can afford unplanned costs, such as those in New York, Los Angeles, Seattle, and San Francisco, everything had to go perfectly for GoTriangle to build its $2.5 billion light rail.

Governance challenges are frustrating because they develop slowly and obviously. In our case study of the Massachusetts Bay Transportation Authority’s (MBTA) Green Line Extension (GLX), a light rail project extending the Green Line deeper into Cambridge, Somerville, and Medford, we discovered that the early conceptual planning for the project called for spartan stations with an estimated cost of just over $535,000 per station. In fairness, these early designs aren’t detailed enough to estimate costs accurately, but the dollar amount and drawings show that the initial plan was to build simple open-air stations with canopies to provide protection from rain and snow—even these barebones stations would have been an upgrade over existing Green Line “stations” along Commonwealth Avenue. By the time GLX worked its way through the project-development phase, secured nearly $1 billion from the FTA, and began construction, the average station cost had soared by more than 109 times to $58,500,000.

Without a governor or an empowered agency leader or managers to remind the project’s designers of its goals and limitations, consultants added the input they received from the operating agency, public, and other stakeholders to the project scope in order to maintain support for GLX, just as GoTriangle agreed to elevate a section of the Durham-Orange Light Rail to appease Duke even though both of these decisions were obviously costly. Rather than utilitarian stations, the new stations had larger footprints to accommodate back-of-house space for MBTA staff, bespoke headhouses to reflect local context, and millions of dollars in site improvements adjacent to the stations. In isolation, one can argue that agreeing to these changes made sense, especially if it kept the project moving forward, a stated goal of Governor Deval Patrick’s administration. But without a comprehensive view of the project, it’s also easy to see how all of these changes lead to much greater costs as each stakeholder sought to extract value from the largest capital project in the agency’s history. One former transit agency leader described this phenomenon of projects sinking under the weight of all of these accretions as “death by a thousand duck bites.”

As GLX’s estimated costs increased from $2 billion to $3 billion, the newly elected Governor, Charlie Baker, made a decision: he stopped the project so it could be value engineered and reprocured, despite almost $700 million in sunk costs. In the aftermath of this iteration of the project, one senior engineer/designer told us that without clear leadership from the MBTA, the project suffered from “pushing the yes button.” So much emphasis was placed on outreach and process that every time someone or group complained or a challenge emerged, the consultants added to the project’s scope rather than someone with the power to say no explaining why it couldn’t add additional scope.

Maryland’s Purple Line like the Green Line has been hindered by poor decision making and uncertainty over who decides. Governor Larry Hogan did assert his decision-making authority over the project after inheriting it from Governor Martin O’Malley. Instead of completing the project on the schedule O’Malley laid out, Hogan raided its budget and delayed its completion by demanding it be redesigned and procured as a public-private partnership. Hogan’s imposed delays were exacerbated by a self-dealing judge who usurped Hogan’s and the FTA’s decision-making authority by holding up the project for more than a year when he found that the project’s environmental assessment rested on flawed assumptions and needed to be supplemented—a higher court eventually overturned the decision allowing the project to proceed. If all of these obstacles didn’t make building transit challenging enough, there were also conflicts with the freight carrier operating along the corridor who required hundreds of millions of dollars in mitigations and changing regulations that added more costs and more delays. Finally, in 2020, Purple Line Transit Constructors, the entity charged with building the Purple Line, walked away from the project and collected a $250 million kill fee. Eric Cortellessa explained in Washington Monthly that what began as a good project providing transit connections between working-class suburbs outside of D.C. with more affluent suburbs by 2020, has become a cautionary tale of how to spend more money to get a worse project:

The bottom line is that what was once one of the most promising mass transit projects in the country will now deliver less than what its planners originally envisioned, at far more cost to taxpayers, and years later than was promised. And instead of paying less than $175 million for the old contractors to finish the job, Maryland will cough up $1.4 billion (plus the $250 million settlement with PLTC) to finish the project. 

As we have seen in our Istanbul and Italy cases, many of these issues are not unique to the United States. When projects are built by a city government rather than a nebulous regional entity like in the United States, often times with little state support, there are fewer opportunities for third party extraction and there are champions invested in completing projects quickly. In Istanbul, for instance, city-owned property, like parks, are often used to site stations so as to minimize property takings, costs, and uncertainty. Transit is so overtly politically relevant that during mayoral elections, candidates from leading parties actively support its construction. Additionally, because of transit’s environmental benefits, especially against a baseline of growing automobility, Turkey adopted an Environmental Impact Assessment waiver that takes months rather than years to satisfy. In Italy, we have seen difficult utility relocations removed from contractors’ scope of work and reassessed by the local entity so as to reduce risk exposure. Furthermore, In Italy there is separation between the capital construction entity building projects and the operating agency running the trains. We have found in Boston and New York that the operating arm of transit agencies are as guilty of slowing down projects and adding scope as anyone else. In Toronto, which has seen its transit construction costs rise recently, the provincial government enacted legislation to speed up transit construction projects by better coordinating across all of the different entities that may slow down construction.

Large-scale transit projects are risky ventures that are sensitive to change, change that is inevitable. Since they often require disrupting both surface and subsurface areas for years at a time, multiple stakeholders are immediately affected. When elected officials fail to support these projects, especially when stakeholders object or request out-of-scope changes, greater costs and longer timelines become inevitable. In the case of the never built Durham-Orange Light Rail, it was all of the mitigations and delays, rather than an intractable technical issue, that torpedoed the project. If there is any hope of building robust transit networks that can compete with the anywhere-to-anywhere connectivity of the automobile, so not just a mile or two of a streetcar down one street, we have to do a better job championing transit projects from conception to completion, counteracting the narrow claims of third parties, and building them much, much more quickly.

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