Policy Documents

The Streetcar Fantasy

Randal O'Toole –
November 28, 2012

Plans to build streetcar lines in San Antonio are based on several critical fallacies, including claims that streetcars are superior to buses in their ability to attract riders and that streetcars promote economic development. In fact, streetcars are slower, less flexible, less capable of moving large numbers of people, and far more expensive than buses.

The biggest argument for streetcars is that they promote economic development. This is mainly based on the experience in Portland, where officials claim a streetcar generated billions of dollars of economic development. In fact, that development was attracted by roughly a billion dollars worth of tax breaks, tax-increment financing, and other local subsidies to developers.

In Northwest Portland, the streetcar serves two neighborhoods of roughly equal size, in one of which developers received hundreds of millions of dollars of subsidies while the other received none other than the streetcar. According to the city’s own tally, the first neighborhood received more than 75 times as much investment as the second. Clearly, it was the subsidies, not the streetcar, that attracted the new development. City officials who think a streetcar alone will generate new development have been misled.

What streetcars do is impose huge costs on taxpayers. Cities with streetcar lines spend three to four times as much to operate a streetcar one mile as they spend on buses. Far from moving large numbers of people, most streetcars actually carry fewer people, on average, than the average buses in those cities, and the cost of moving one person one mile is two to seven times greater by streetcar than by bus.