Measuring Return on Investment on Transit: A Snapshot from Northern Virginia
Long credited with fueling economic development in Northern Virginia, Metrorail and Virginia Railway Express (VRE) also provide financial benefits to the state, according to a new report by the Northern Virginia Transportation Commission (NVTC). The additional 85,000 households and 130,500 jobs that the two rail systems make possible in Northern Virginia generate over $600 million each year in sales and income tax revenues that flow to Richmond. For every dollar the state invests in Metrorail and VRE, it receives $2.50 in return.
“If you back out Virginia’s annual investment in Metrorail and VRE, that equates to a $370 million ‘profit’ to taxpayers annually,” noted NVTC Vice Chairman Paul Smedberg in a Washington Business Journal Viewpoint. “What does this mean in real world terms for Virginia? The $370 million profit easily pays for Virginia’s annual general fund spending on its exceptional colleges and universities ($316 million) or the state police we rely on to keep our communities safe ($266 million).”
To quantify the value that Metrorail and VRE bring to the Commonwealth of Virginia, NVTC took the current traffic and development in the region, removed Metrorail and VRE from the picture, then moved development out of Northern Virginia to the District of Columbia or Maryland until traffic models showed a return to current levels of rush-hour congestion.
Based on the number of jobs and homes moved across the Potomac River, NVTC then estimated how much less the commonwealth would take in from income taxes and the portion of the sales tax that goes directly to the state’s general fund.
The results of the first runs of the transportation model, which removed rail transit in Northern Virginia and held to the existing land use totals, demonstrate rail’s importance for commuters in Northern Virginia. With the added congestion, commuters could not travel as far in the same amount of time. Their trip length decreased by about 5 percent, which is significant.
The impacts associated with a lack of rail transit in Northern Virginia are:
- 56,500 more lane miles of congestion on arterial roadways;
- 50 percent fewer transit trips in the peak period;
- 80 percent decrease in jobs accessible by transit for Northern Virginia households; and
- 130,000 fewer transit trips each weekday.
“The costs associated with world-class rail service are undeniably high, but so is the return,” noted NVTC Chairman Jeff McKay in an op-ed in The Washington Post. “Lack of investment in Metro and VRE puts more than the commonwealth’s finances at risk. It risks frustrating commuters, alienating tourists, tarnishing our business-friendly reputation and diminishing our quality of life. While Metro and VRE may operate in Northern Virginia, they benefit the entire state. It is time for Virginia’s legislators to come together and find sufficient and permanent revenue that can be dedicated to transit. So much is riding on it.”