Effective Transit Investment

Transit capital projects should prioritize winning mode share. Reducing the system’s per-rider subsidy should be the main prioritization metric.


METRO’s Red Line in Houston, Texas.  A definitive example of an effective Sun Belt transit investment.

Financial Constraints

Transit systems have a limited annual budget they can spend on operations and maintenance of their services. For CapMetro, this budget funding overwhelmingly comes from a 1% sales tax levied by communities in its service district.

Transit agencies also face constraints on the amount they can dedicate to major capital projects. CapMetro’s major capital projects (e.g. new rail or bus rapid transit routes) require an infusion of bond funds, which typically requires a referendum within their service area or by partners willing to pay the bill. The CapMetro service district passed a referendum in 2004 for the MetroRail Red Line; this was after the failed Guadalupe-Lamar-Congress light rail vote in 2000. In 2014, a City of Austin referendum for the Highland light rail proposal failed.


Transit systems compete with other transportations modes such as cars, bikes, and walking. In Austin, the dominant mode is passenger-driven cars. For work commutes, single-occupant car vehicle trips are 73.7% of commuters, according to the 2016 5-year American Community Survey. Transit is the primary work commute mode for 4% of Austin’s working population.

According to the 2017 National Household Travel Survey, commuting-to-work is only 18% of overall household trips, yet voters tend to perceive work commutes as both the peak-level utilization of transportation infrastructure, and their largest mobility pain-point. In Austin, our suburban land-use and car-centric infrastructure combine to make car ownership a de facto compulsory purchase, as it is the only reliable way to freely move around the city in a timely fashion.

The Mode Share Paradox

Transit agencies face a paradox: to win mode share, they need political support for greater operating funds, dedicated right-of-way, appropriately-priced parking, and a bevy of other car-centric policies to be undone. But they can’t get that enduring political support unless they first grow their mode share so that greater slices of the electorate consider themselves customers or likely customers.

Transit capital projects, both large and small, can play a crucial – if not the most important – role in resolving this paradox.  Effective capital projects, whether it be shelters or new high-capacity vehicles or information technology upgrades, reduce the overall system’s cost of servicing a rider’s trip, and therefore enhance the productivity of the underlying operating budget.

Productivity Rules

Productive capital projects add such a significant amount of riders, that once the new costs from debt service and operating expenses are accounted for, it’s still cheaper to provide a trip when compared to the previous status quo. This enables the transit system to gain mode share by better leveraging the same operating budget.

There are several ways to measure the productivity of a transit investment, but a straightforward metric that professionals respect and laypeople can understand is the per-rider subsidy for a trip. This may also be referred to as the “per-passenger cost”. This metric focuses on the amount that a rider is subsidized by the annual operating budget after their fare is deducted from the cost of providing the trip. Effective investments reduce the average per-rider subsidy for the system.

Transit ridership is a proxy for its overall mode share, as well as the percent of the population that uses transit. However, an alternative approach to measuring productivity can focus on the per mile cost for reductions of vehicle miles traveled (VMT). Reducing the amount of miles traveled decreases vehicle emissions, deaths from crashes, obesity, and misery. Productive transit investments would reduce VMT at a lower cost-per-mile than other available investments.

Practically, however, focusing on VMT may run the risk of prioritizing projects that target a relatively smaller number of far-flung commuters over a greater count of individuals using transit for many shorter commute and non-commute trips. Exclusive reliance on cost-effective VMT reduction may undermine the ability of a transit system to gain enough riders to allow it to avoid being relegated as a niche mobility provider.

Selecting productive transit capital projects is tricky.  Austin’s MetroRail Red Line has a very high per-rider subsidy. The 2017 CapMetro budget document estimated the per-rider subsidy at roughly $32. The average for all buses was estimated at $6, though the most productive bus routes are closer to $4. The 2014 Highland light rail proposal was criticized for having too high a per-rider subsidy compared to bus rapid transit given the modest density around the likely rail stops. Placing BRT in a light-rail-ready corridor would also be sub-optimal, as the system would prematurely cap the productivity gains it could make from higher ridership.

The Last Mile

While productivity should be paramount, equity and safety impacts may prove too negative to allow a productive project to be a wise choice for a public agency. The specific legal standards that may jettison a productive project depend on applicable federal laws (e.g. Title VI of the Civil Rights Act) and local policies that affect the project type. Beyond legal constraints, discussions about balancing productivity against equity and/or safety will center on how communities decide to compare and convert the different units used to measure equity and safety. For example, how much of a higher per-rider subsidy is acceptable to avoid a death from a surface rail crash? These are difficult questions that require compromises that reflect community values. Luckily, productive transit investments tend to improve equity and safety metrics.

Finally, given the importance of productive project selection, evaluation of transit executives and elected officials should include analysis of their effectiveness at identifying and advocating for productive transit capital projects.



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