☆ Local Libertarian: VTA's "build-now" case for BART extension doesn't withstand economic scrutiny
Image by Wikimedia Commons
Recent media coverage of BART to SJ's wild cost overruns--and opposition from leading pols--has BART advocates scrambling for a convenient excuse. Here's what BART fans have come up with: the problem, they say, is that we're just not building it fast enough. Brian Holtz, an officer of the SCC Libertarian Party, takes a critical look at VTA's business logic, and finds their "build-now" thesis spurious. An Opp Now exclusive.
Opportunity Now: We had to chuckle when we saw BART advocates suggesting that the extension's woeful cost overruns were due to a slow building schedule—totally ignoring the fundamental system design flaws that make this project such a boondoggle. How do you see their logic?
Brian Holtz: I'm suspicious of their claims that we need to hurry up, for two reasons. First, it's pretty obvious that they're trying to get their sunk costs into the ground asap so it's harder to be stopped or dramatically altered—even if people wake up to the realities of the budget-busting cost.
Second, VTA and BART may have chosen the wrong time to hurry up. Let me offer a parallel experience. I'm on the board of a local water district (Purissima Hills Water District). We did a project a few years back during the pandemic, and because so many other construction projects had been put on hold, we were in a buyers' market. We rushed so we could get really good prices for laying serious mileage of pipe and other capital projects. The prices went up, of course, after the pandemic receded, so that worked out for us.
But there's no big advantage of hurrying now—the moment to rush has passed. The prices have gone up across the board on almost everything; so there's no real cost advantage to securing today's prices because the value period is long gone. The time to rush was three years ago.
ON: And by focusing attention on the build-out schedule, they deflect criticism of the extension's dubious financial model and troubling ridership projections.
BH: It feels like VTA is not being forthcoming with the people who are funding the project—we taxpayers. First off, the question isn't only the cost of the investment—there's a very important question of *return* on taxpayers' investment. Given current macro and micro trends, I am suspicious of BART's ability to achieve any sizable farebox recovery on this project.
ON: BART farebox recovery rate was 50–60%, pre-Covid. Ridership has slipped more than 35% since then, so farebox recovery rates likely are even worse. Caltrain had an admirable 70% farebox recovery pre-Covid, but its ridership has tanked also since Covid.
BH: Count me extremely skeptical that expanding these systems will improve those recovery rates—in fact, I'd be worried that expansion may make the farebox recovery percentage even worse.
But we're still not addressing the bigger question: even if we stipulate that they can save a little money on the cost side by drilling now, why on Earth would we expand into a transit ridership market that is crashing?
ON: Increasing supply while demand is cratering. Adam Smith would say that doesn't make a lot of sense.
BH: Precisely. We should not just be looking at near-term costs, but asking how sustainable this model will be going forward. How much ongoing loss will this system be saddling taxpayers with? Are we blundering into another Light Rail?
It's ironic that we're pursuing this old school technology in the heart of Silicon Valley, where we are on the verge of transformative technologies like Uber, the gig economy, and ridesharing apps, which totally have the potential to change the way our metro area's fleet of cars are used. And in a few years, self-driving cars are going to greatly change things as well.
It reminds me of when I moved here in 1990, I was struck by all the flowers on the medians and the solar-powered emergency call boxes on the freeway. I felt like I had moved into a wealthy area that has all this beautiful, modern stuff. But what strikes me now is how the time for those call boxes has come and gone. Ten years from now, when self-driving cars are just a standard everyday thing, people will likely look back and say investing in BART was just as outdated as those call boxes—and colossally more expensive, to boot.
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