Transit creates value, case study: Las Vegas

Las Vegas Monorail (1851)

Years ago, I dissed the Las Vegas Monorail, which eventually did flame out in a spectacular bankruptcy. Per Howard Stutz in the LVRJ: “a two-year-long bankruptcy reorganization wiped away more than 98 percent of the transit system’s debt.”

Yet the monorail is still up and running — it’s worth more that way than as scrap* — now that it doesn’t have to pay back its capital costs (which no transit system could feasibly do just from operations). Management can now think more strategically about how the monorail adds value. Far more than just a novelty ride, the system “has relieved traffic congestion on Paradise Road when large conventions are in town,” and as such “[CEO Curtis] Myles said the monorail company is hopeful for more Strip support.” In other words, even in Vegas, the usual economics apply: transit doesn’t make money for the people who run it, it makes money for the people around it (landowners and people traveling in the corridor regardless of mode), whether or not they’re actually paying for it. If those people aren’t paying into the system through taxation, they’re free-riding (so to speak).

Not surprisingly, research by Daniel Chapman and Robert Nolan on the value of transit finds that it spins off significant value from agglomeration economies. Transit moves people, to be sure, but more importantly it creates places: all transportation is ultimately a means to an end, but transit enables the creation of super-profitable large agglomerations, throughout a metro area: “A 10 percent expansion in transit service (by adding either rail and bus seats or rail miles) produced a wage increase between $53 and $194 per worker per year in the city center. The gross metropolitan product rose between 1 and 2 percent, too.”

Joel Garreau said as much in Edge City (!) all those years ago, that transit can, at the margin, add just enough population to push a mediocre agglomeration of offices into the realm of a “nice” place. What we didn’t know then was just how much more profitable that “nice” factor was.

* Interesting tidbit: even in the midst of WW2, when scrap metal prices were at what must have been a relative record, disassembling the ruined Tacoma Narrows Bridge cost more than the scrap metal was worth.

In local news, Daniel J. Sernovitz at WBJ covers what might genuinely be a historic parking spot, worthy of commemoration but perhaps not preservation (I mean, a parking spot is a parking spot).