Port Authority’s light-rail costs near the top nationally

Overview: A recent Policy Brief (Vol. 22, No. 14) analyzed the Port Authority’s light-rail system with emphasis on the North Shore Connector.  This Brief compares the authority’s operating expense per vehicle revenue hour with other systems in the United States in the year before COVID.

The National Transit Database (NTD) defines light-rail as “a transit mode that typically is an electric railway with a light volume traffic capacity [with] passenger rail cars operating…on fixed rails in shared or exclusive right-of-way.” 

Based on the NTD’s “Transit Profiles: 2019 Top 50 Reporters” (ranked by the number of unlinked trips on all transit modes offered by an agency) there are 19 mass-transit agencies in the U.S. that operated light-rail. 

Included in the group was the Port Authority of Allegheny County (PAAC).  There were 7.2 million unlinked light-rail trips taken, which ranked the agency fourth from the bottom.  For the group, the range was just under 60 million in Los Angeles to 1.5 million in Cleveland.  Eleven percent of all mass transit trips provided by PAAC were on light-rail; only Newark, Baltimore and Cleveland were lower. 

Operating expense per vehicle hour

In Policy Brief Vol. 18, No.13 it was noted “operating expense per revenue hour should be considered the best cost measure since that is the fundamental cost of providing the service.”  On bus service, PAAC was much higher than the average for a peer group of five agencies.

In order to replicate the comparison for light-rail, operating expense per vehicle revenue hour is shown in the table below for the 19 agencies.  It ranged from $695.47 in Newark to $168.59 in Denver.  The average for the 18 systems other than PAAC was $339.48. 

Light-Rail Operating Expense per Vehicle Revenue Hour, 2019

PAAC’s $422.80 ranked fifth highest of the group.  It was 9 percent higher than the next closest agency and 25 percent higher than the group average. It was 54 percent higher than the average $273.77 for the 14 agencies with a lower operating expense per vehicle revenue hour. 

Systems in Salt Lake City, Minneapolis, San Diego and Denver had an operating expense per hour that was less than half of PAAC’s. 

If PAAC was able to operate at the group average on a per vehicle hour basis it would result in savings of $14 million per year of its $71.1 million in light-rail operating expenses. Even more dramatic savings of $25 million of the $71.1 could be achieved if PAAC operated at the average cost of the 14 less expensive systems.

Looking closely at the components of total operating expenses for all modes of transit provided by an agency—labor, materials and supplies, purchased transportation and other operating expenses—there were five agencies where labor represented over 70 percent.  PAAC was one of the five at 74.1 percent.  It was exceeded only by agencies in Minneapolis (77.9 percent), San Francisco (76.8 percent) and Cleveland (74.8 percent).  If the overall labor expense percentage of 74.1 percent was applied to PAAC’s $71.1 million in light-rail operating expenses, the labor expense would be $52.7 million that year. For the 11 agencies with a lower operating cost per vehicle revenue hour than PAAC and also had a labor cost lower than 70 percent of total operating expenses, the average labor cost was a dramatically lower 55 percent of total.  

Much like PAAC’s 2016 performance review performed by the Pennsylvania Department of Transportation (PennDOT) as required by Act 44 of 2007, PAAC was lower on operating expense per vehicle revenue hour than the system in San Jose but higher than those in Baltimore, Cleveland, Minneapolis and St. Louis.

Moreover, it would be reasonable to assume that the cost of living difference among the cities would be correlated to light rail operating expenses. However, that is not the case. Using the Bureau of Economic Analysis’ Regional Price Parities (RPP) State and Metro Area Index which assigns a value of 100 to the U.S. it is possible to evaluate the assumption that light rail cost and cost of living in the cities are correlated.  The Pittsburgh Metropolitan Statistical Area (MSA) had an RPP of 95.4 and ranked 155th out of 384 MSAs surveyed. The four agencies that had a higher operating expense per vehicle revenue hour than PAAC had a higher RPP with an average of 111.9. 

However, there were 10 agencies—including those in Dallas, Baltimore, Minneapolis and Denver—with a higher RPP than Pittsburgh (average of 102.98) but lower operating expense per vehicle revenue hour.  There were five MSAs where the RPP was quite close to Pittsburgh’s and had lower operating expense per vehicle revenue hour measure.

Managing costs

The Act 44 performance review stated that “to some extent, costs should be managed through good governance, proactive management and effective cost containment.”  PAAC’s 2021 service report noted its high light-rail costs (per passenger served) and attributed it to “comparatively high operator and maintenance employee wages and benefits, high maintenance costs … and closely spaced stations which cause the rail to travel at lower speeds.” The report stated studies were underway to come up with solutions to lower costs. It is not known when the findings will be delivered or if any steps will be taken to lower costs.

That’s very important to keep in mind as the PAAC administration negotiates a new labor agreement with its largest transit union in the coming months. To date there have been no layoffs or furloughs related to service being provided despite falling ridership throughout the pandemic. Average weekday light-rail ridership in February was a stunning 79 percent lower than in February 2019. 


PAAC has forecast how long federal stimulus money will last and that depends on how ridership recovers. PAAC has also acknowledged that state funding is entering a period of uncertainty with payments from the Turnpike Commission to PennDOT dropping significantly. 

That has not dissuaded talk of extending the light-rail system from where it currently ends on the North Shore.  In the same year when PAAC received a full-funding grant agreement from the federal government for the North Shore Connector, systems in Denver, Dallas, Newark, Los Angeles and Seattle also received funding for projects.  The connector’s cost per mile was much higher than the other projects, and that was before the final price tag.

A finite amount of federal stimulus money, a major change in state subsidy and local tax levies on alcohol and vehicle rentals that have been affected by the pandemic are all factors affecting future PAAC revenue. This a prime opportunity for PAAC to enact long overdue reforms to reduce or at least slow the rise in operations costs.

The North Shore Connector turns 10: a look back and a look ahead

Summary: On March 25, 2012, the Port Authority’s North Shore Connector, the 1.2 mile-extension of the light-rail system under the Allegheny River from Downtown to the North Shore, began service.  Allegheny Institute research analyzed the construction, escalating estimates and questionable benefits of the connector. 

The connector’s history

“There [are] very serious questions about the North Shore Connector: Can we afford this project? Where are the estimates of economic benefits to justify such outlandish expenditures? Surely we cannot afford to waste valuable resources when the region’s other transportation needs are much more pressing.”  Allegheny Institute Policy Brief Vol. 1, No. 16

That 2001 Brief raised questions that persist to this day. As documented in subsequent Briefs, the connector’s cost grew from $363 million (June 2005) to $393 million (August 2005) to $435 million (July 2006, the amount at which the project received a full-funding grant agreement from the federal government) to $553 million (January 2009) before finally settling at $517 million when it opened for service.  And that’s after lopping off the “spine line” to the David L. Lawrence Convention Center, perhaps the only justifiable part of the project.

The connector received 80 percent of its funding from the federal government, and there was a strong “use-it-or-lose-it” rationale locally when the connector proceeded in the face of the escalating estimates. 

A 2016 Federal Transit Administration (FTA) “Before-and-After Study” on the connector stated “under-estimates of project costs were a persistent problem throughout the development of the North Shore Connector.” The study chronicled how components of the connector were dropped at various stages; that 0.3 mile leg to the convention center, a third station on the North Shore and additional light-rail vehicles. The convention center leg was where much of the population and, thus, projected ridership, was to be drawn. Its elimination affected the “ridership numbers and the attractiveness of the project” according to Policy Brief Vol. 6, No. 7.

Arguments for the connector made by proponents included serving workers commuting to the North Shore; improving linkages to recreational, cultural and civic facilities; spurring development on the North Shore and providing the jumping off point for light rail extensions to other parts of the county. 

As Institute research pointed out, the cost per rider for the first 20 years of operations, taking into account operating and capital costs, was an estimated $15 to $20. The connector gained national attention in 2010 as it was highlighted by two U.S. senators as the third-most-offensive use of federal stimulus spending.

Not long before opening it was announced that the Port Authority had secured agreements with four sponsors to provide free rides to and from the two new stations on the North Shore to the four stations Downtown.  Officials touted the possibility that naming rights for the stations might be sold. As of today, an agreement to continue free rides from one station through March 2024 has been proposed; the station names are unchanged.

In Policy Brief Vol. 12, No. 17 indicators in the fiscal year preceding the connector’s opening (July 1, 2010, to June 30, 2011) were 6.9 million unlinked light-rail trips and light-rail operating expenses of $48.1 million, resulting in an operating expense per unlinked trip of $6.96. In addition, there were 141,356 light rail vehicle revenue hours driven that year, resulting in an operating expense per hour of $340.58.

Performance after the connector’s opening

In the first full fiscal year following the opening of the connector (FY2012-13), operating expenses fell, unlinked trips and vehicle hours rose.  As a result, the operating expense per trip and per hour fell from FY2011-12 to their lowest point. 

In the years after FY2012-13, operating expenses rose each year.  Unlinked trips rose twice, vehicle hours did so four times. If all trips above the 6.9 million in FY2010-11 are attributed to the connector, FY2015-16 would be the year in which there was the biggest net gain, 1.2 million trips. In the last year pre-COVID, the number of unlinked light-rail trips were around 245,000 greater than before the connector opened. Operating expense per unlinked trip rose each year and was an astounding $12.48 in FY2019-20.  So, too, did operating expense per hour, reaching $468.39 in that same fiscal year.

Light-Rail Trips and Expenses, FY2010-11 to FY2019-20

That’s systemwide.  How many light-rail riders are using the connector segment?  The 2016 FTA study stated “actual ridership on the North Shore Connector in March 2016 was 11,100 trips per average weekday.  Of this total, 7,400 were made to jobs, shopping, and other activities in downtown Pittsburgh.” 

The study also stated “another 1,500 trips were made to jobs, education, entertainment, and other activities on the North Shore.  These trips originated throughout areas to the south of the Allegheny River.”  As a share of the 11,100 trips, 64 percent were home to work, 22 percent home to non-work and 14 percent non-home to non-home.  Based on that data, 67 percent of the trips were within the “free fare zone.” 

To date, neither the FTA nor the Port Authority has replicated the connector ridership survey.  There is plenty of data for years 2017 through 2020 on the Port Authority’s website on ridership (referred to as “ons” and “offs”) at the two stations added on the North Shore, but not where those trips originated or ended.  Is ridership to Downtown still around 67 percent as it was in March 2016?  What about weekend rides? And how would ridership be affected if a fare were eventually added and what would that do for the authority’s finances?

As a way of producing an estimate based on reasonable assumptions, Port Authority audits contain data on free ridership for light-rail, which in FY2018-19 was 2,014,557 trips.  Assuming that all of those trips averaged one mile in length, and almost all took place between one of the stations on the North Side and one in Downtown, using the FY2018-19 operating expense per passenger mile for Port Authority light rail of $2.46 from the National Transit Database, the cost of providing free rides would be close to $5 million.  That represents 7 percent of light rail operating expenses that year. This cost has been minimally offset by the sponsorships. The rides are free to the rider, but taxpayers are paying for the labor, maintenance, utilities, etc. associated with the free trips.

Looking forward

The FTA study concluded with the statement that “Port Authority predicted that 14,300 trips would use the North Shore Connector in 2025.”  This forecast depended on various factors: the continuation of the “free fare zone”; the downtown economy; North Shore development; funding to maintain service; gas prices and other factors.  Can anyone say today that any of these components have a clear future, including the “free fare zone”, especially in light of the effect that COVID had on ridership?  The latest data on average weekday trips for February 2022 show overall light-rail ridership is 79 percent lower than it was in February 2019.

In 2010, the engineer in charge of the connector’s construction said “our hope is that 20, 30 years down the road people will say ‘I don’t know what the controversy was about.’” Twelve years after the engineer’s comment, have people forgotten about what went into the expensive project?  Will they forget about the connector cost overruns? It is doubtful that in 2012 many knew there would be a bus rapid-transit project underway across the river. That project has one-half the price tag of the connector with 44 percent of the funding put up by the federal government. What could be in store during the next 10 years?

The North Shore Connector turns 10

In 2010, the engineer in charge of the North Shore Connector’s construction—the 1.2 mile extension of the Port Authority’s light rail system from Downtown Pittsburgh under the Allegheny River to the North Shore—said “our hope is that 20, 30 years down the road people will say ‘I don’t know what the controversy was about.’”

Friday marks 10 years since the connector opened to the public.  Is the controversy starting to wear off? No doubt boosters who pushed hard for the project, even in light of escalating costs, dubious benefits, elimination of parts of the project (especially the link to the convention center, which is where much of the economic justification came from) and the connector being called a “tragic mistake” and a bad use of federal stimulus dollars , never saw anything controversial. 

But there were many problems with the connector. Institute research as far back as 2001 questioned the need for the connector and documented the construction as the price tag rose and the arguments for pressing on became more outlandish.  The connector’s cost grew from $363 million to $393 million to $435 million to $553 million before finally settling at $523 million. The federal government put up 80 percent of funding; thus, a “use-it-or-lose-it” sentiment was very strong. 

When it opened, riders who traveled from the North Shore to points in Downtown and back would not pay a fare due to the expansion of the existing “free fare zone” and agreements with four sponsors.  One agreement expired in 2015, the other was renewed through the end of this month.  But no official action has been taken by the Port Authority board to extend it.   Does that mean fares will be charged for under-the-river trips as they are from Downtown to Station Square?  Or will authority revenues from riders and taxpayers continue to provide free rides? 

And just how many trips are taking place on the connector?  To date, the most detailed study was contained in the Federal Transit Administration’s (FTA) Before and After Study published in 2016.  “Actual ridership on the North Shore Connector in March 2016 was 11,100 trips per average weekday.  Of this total, 7,400 were made to jobs, shopping, and other activities in downtown Pittsburgh … another 1,500 trips were made to jobs, education, entertainment, and other activities on the North Shore.  These trips originated throughout areas to the south of the Allegheny River,” according to the study. As a share of the 11,100 trips, 64 percent were home to work, 22 percent home to non-work and 14 percent non-home to non-home. 

From that data the share of weekday trips occurring within the “free fare zone” was 67 percent and most likely for those parking on the North Shore and riding for free to a job Downtown.

That level of detail has not been replicated.  The FTA likely won’t revisit the project.  The Port Authority was supposed to do a ridership survey but it was delayed due to COVID.  The authority’s website does provide data on what it terms “ons” and “offs” at all light-rail stops, including the two stations built as part of the Connector. Those are estimates based on employee counts taken at stations. 

For the light rail system as a whole, the number of unlinked trips increased after the connector opened but then began to fall.  However, light-rail operating expenses climbed yearly and, as a result, operating expense per unlinked trip did as well. In FY2010-11, before the connector began service, there were 6.9 million unlinked light-rail trips and $48.1 million in operating expenses for a per trip expense of $6.96.  Trips rose and remained in the range of 7.1 million to 8.1 million through FY2018-19.  But expenses rose annually to reach $71 million in that fiscal year.  The operating expense per trip was $9.93 pre-COVID. 

Where the system goes from here is anyone’s guess.  The Port Authority is embarking on a bus rapid transit project in Uptown but has ambitions for a light rail extension.  The just-released bus and light-rail weekday ridership numbers for February show average weekday ridership is down 50 percent and 79 percent on those modes, respectively.  Is this the time to be thinking about expansion? Will future projects make the connector look small in comparison?

Looking at Light Rail Numbers

An article over the weekend about the possible extension of light rail in the future noted that the number of annual trips on the light rail system stood at 7.7 million in 2012, which is an increase of 15% over 2011 totals (6.7 million according to APTA data). At 7.7 million, 2012 ridership would be the highest light rail total back to 1996 (as far as APTA data goes back) besting the previous high during that time frame (7.5 million in 1997).

Of course, we don’t know how much the extension of "free" rides between the North Shore Connector stations and Downtown have boosted totals or the newness of the Connector itself had an effect. APTA does not provide a breakout of the light rail mode’s expenses, revenue, or employees as does the PAT budget: we noted last year the baseline data. There is not yet a modal comparison available for the 12-13 fiscal year nor the 13-14 fiscal year for the Authority. We did calculate the "expense per rider" by dividing total expenses of the light rail system by ridership at $7.08 in 2011. With the boost in ridership in 2012 to 7.7 million if the cost per rider was to stay roughly the same the Authority’s light rail expenses could have risen to no more than $54.8 million.

The APTA data does however separate by quarter; the biggest boost over 2011 ridership came in the second quarter (April, May, and June) when there were 2.0 million unlinked trips. The previous year there were 1.67 million in that quarter.

PAT Light Rail: Pre-Connector Operating Data

With the opening of the North Shore Connector and the extension of light rail to the North Shore, the debate over whether it was wise to spend and shift Federal, state, and local money to the project now moves to what impacts it will have on the light rail system as a whole. 


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A Snapshot of PAT Data as the Connector Begins Service

With the opening of the North Shore Connector and the extension of the trolley line to the North Shore, and until there is the extension of the project to the airport or the North Hills as boosters of the project have used as justification, it is important to take a snapshot of light rail operations as they are in order to establish baseline for comparison to future operating data.

This year’s Port Authority budget (2011-12) put in some growth in rail ridership (less than 1%) and expenses (5.2%) due to the opening of the Connector. But actual and audited numbers for PAT’s light rail system (in the 2010-11 fiscal year) without the Connector’s impact shows the following:

  • Total Rail Ridership: 6,918,000
  • Total Passenger Revenue: $9,811,000
  • Total Other Revenue: $295,000
  • Total Expense: $49,038,000
  • Total Rail Employees: 468
  • Total Length of system: 48.9 miles
  • Total Rail Vehicles: 83

The critical measure we can glean from this data is "total expense per rider" which stands at $7.08. Of course, this does not take into account the capital expense for the existing rail system which would boost the expense per rider significantly higher. But as the Connector leg gets up and operating and ridership numbers come in it will be easy to see from PAT’s numbers what happens to the total expense per rider. Based on FY11 numbers, a light rail trip was about $1.50 more than a PAT bus trip.

More than 80% of the total expense for light rail is accounted for by salaries and benefits, leaving $9 million or so to be spread between materials, utilities, provisions for injuries and damages, purchased services, and other. Passenger revenue ($9.8 million) covers about 20% of total expense. Recall that until 2015 corporate sponsorships are underwriting free trips between Downtown and the North Shore stations (and vice versa) so "other" revenue on the light rail system may rise slightly relative to passenger revenue.

APTA Misses the Bus

On November 18th the American Public Transportation Association (APTA) released a study claiming that Pittsburgh area commuters who drive to work could save $9,201 per year by purchasing a monthly pass and taking the bus or light rail to work.  According to APTA, this savings number is based on a comparison of an average monthly transit fare to the average cost of driving.


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Free Trolley Rides? More Expensive Than You Might Think

As the North Shore Connector moves closer to completion and light rail cars are set to make their maiden voyage under the Allegheny River in March of 2012, Downtown boosters are angling to make the area around the Golden Triangle-from Station Square to the North Shore-a free travel zone with trolleys running with much greater frequency. A consultant who studied the idea produced a figure of $1.5 million in additional costs should the recommendation be implemented.

It is unclear how that number was derived since the frequency of operation and fare amount have yet to be determined officially by Port Authority officials. For close to a year there have been inklings that the Port Authority would be receptive to the plan if private/foundation support could be found in the form of station or zone naming rights and sponsorships.

According to the National Transit Database, PAT’s light rail operating expenses in 2009 were $51 million while fare revenues on light rail were $7.8 million, and the number of unlinked trips was 7.3 million. Thus, the subsidy required to cover operating expense per unlinked trip on PAT’s light rail system was $6.01. And this does not include the very large capital expense of the light rail system!

Leaving logistics of trolley operations and station arrival intervals aside for the moment, we have to question whether it is good policy for a transit agency in severe financial straits to be providing free service. Clearly, running the trolleys with much greater frequency in the Downtown area will substantially increase operating costs, and not collecting fare revenue means the agency is leaving money on the table. It is doubtful that sponsorship or naming rights will recover the combined costs that could run into several millions of dollars each year.