Costs & Revenues

Cost & Revenue Projections

To protect and preserve the beauty of Lake Tahoe, the entire region needs a comprehensive alternative transit system. Cars and their emissions and road salt and debris constitute a threat to lake clarity and require extensive mitigation. No one type of transport is going to replace the current fleet of trucks and cars entirely, so a mix of solutions needs to be implemented to even replace an appreciable portion of the current surface traffic.

Make no mistake – this is a large scale project.  The current estimate is a $500 million for a 45 mile system with a main station, about 10 way-stations, 6 terminal stations, (and their parking structures, visitor facilities, and maintenance facilities). 

 

However, this is a long term major infra-structure addition with a 30-50 year amortization that will provide millions of passenger miles.  It also could add value to local homes and businesses and perhaps even help bring back the Winter Olympic Games or at least increase international tourism.

Any alternative systems must compete in terms of cost, positive rider travel experience, and gear/baggage handling convenience - while at the same time reducing carbon footprint and environmental degradation associated with transportation.

The studies to be conducted by the alternative transit advisory council will be broad ranging based on the premise that we only get one chance to do it right. These “Blue Sky/Blue Lake” studies will look at an integrated multi-modal system with high speed rail links for the longer runs from Sacramento and Reno to Tahoe (and possibly on the East Rim of Lake Tahoe itself to South Shore - with piggy back auto and gondola carrier flatcars). These high speed links would be integrated with a series of aerial tramways for shorter, multi-station stop trips and with water taxis and car ferries for point to point lake surface travel. In addition, the studies will include evaluating the latest directions in general and commercial aviation to complete the inter-modal mix of solutions. These systems would integrate with neighborhood shuttle buses, rental vehicles, and bikeways and pedestrian paths. Another key leg of the system would be those portions of the system that would serve Donner Summit and the Town of Truckee as shown. The town is the region’s population and transit center in addition to being the gateway to North Lake Tahoe.  See the Routes page link to see the intermodal system map.

Of course for any of these new or alternative modes to be considered a worthy replacement for the current, automobile-based infrastructure, the mode(s) will have to be more energy efficient per passenger mile and have lower negative construction and maintenance environmental impacts than do cars and highways. The long term costs/benefits picture must include the energy, material, and environmental costs of the construction of any alternative infrastructure. A part of the initial studies will be to determine if some of proposed transit system’s energy sources could be developed and distributed regionally – instead of relying on oil-based imports. Another and perhaps most critical factor determining the projects’ success is whether the new components of this multi-modal system could be based on business models that show the potential profits to be made from have a system in place before oil prices limit our options even more.

Development and construction of the system may take decades. The points at which the funding and political/social willpower to make the needed transit infra-structure changes will be “tipped” or driven by fuel costs (and availability), carbon costs or “soot taxes,” etc.

A major mental obstacle to looking at this potential profit picture is the long list of artificial subsidies we pay as individuals and as a society to make automobiles SEEM affordable. If our mindsets were such that the nation’s automobile-related road maintenance and medical expenses and the costs of continued military presence in the Persian Gulf were counted in the price at the pump – we would see the true cost of cheap gas. The embedded Excel spreadsheet attempts to “even the playing field” by identifying the true combined costs of the various modes of personal transportation we currently use (with a series of gas price increases as economic tipping points).  See the link to the Transits Costs and Tipping Points Table at the page end.

The table below roughs out some cost components.

 

Item

Qty.

Cost

Total

Cable Line

45 Miles

$5M/Mile

$225M

Main Station

1

$45M

$45M

Way Stations

10

$5M

$50M

Terminal Stations

6

$20M

$120M

 

System Construction and Operating Costs

The Baseline - Existing System Construction and Operating Costs

 

A 1992 paper for the transportation research board estimated that a one-mile detachable gondola system costs $5 to $9M. Reversible systems can be much more expensive due to larger terminals and massive machinery needed to haul larger cabins. One feasibility study in 1980 showed that a 4,000 foot (3/4 mile) reversible ropeway in Detroit would cost over $10 million ($26.7 million in 2006 dollars). 

Some estimates can be established based on the construction costs of systems actually built or studied in the recent past.  Systems in California, Colorado, and Oregon can be used, for examples of existing cable systems.  The monorail line in Las Vegas or the San Jose Light Rail System could be used as another baseline for fixed rail systems.  The link below shows some 2006 data and estimates:

http://melbpt.wordpress.com/2007/09/06/calculating-tram-line-construction-costs/

Construction Cost Estimates

Squaw Valley, California – Actual System

 

Construction Costs

2009 Value

Miles of Line

Year Built

Notes

$5.5M ($14M / Mile)

$33.5M

.38 Mile

1968

120 person capacity

 

Yearly Operating Costs

# Passengers Per Year

Cost Per Passenger Mile

Retail Ticket Cost

Notes

Under Study

Under Study

Under Study

$16-29

 

Telluride, Colorado – Actual System

 

Construction Costs

2009 Value

Miles of Line

Year Built

Notes

$16M ($6.4M / Mile)

$21.6M

2.5

1996

32 – 8 Passenger Cars

 

Yearly Operating Costs

# Passengers Per Year

Cost Per Passenger Mile

Retail Ticket Cost

Notes

$3.5M

Under Study

Under Study

Free

 

Roosevelt Island – Actual System

 

Construction Costs

2009 Value

Miles of Line

Year Built

Notes

$20M ($33M / Mile)

$74.5M

0.6

1976

2 Cars - 125 People/Car

 

Yearly Operating Costs

# Passengers Per Year

Cost Per Passenger Mile

Retail Ticket Cost

Notes

Under Study

Under Study

Under Study

$3

 

Portland, Oregon – Actual System

 

Construction Costs

2009 Value

Miles of Line

Year Built

Notes

$57 M ($91.2M / Mile)

$60.5M

5/8 (3,300 Feet)

2006

Projected at $15 M

 

Yearly Operating Costs

# Passengers Per Year

Cost Per Passenger Mile

Retail Ticket Cost

Notes

1.7 M

1.5 M

$1.81

$4.00

2 – 79 Passenger Cars. 

Most users are from OSHU campus medical center and use “free” passes.

Palm Springs, California – Actual System

Construction Costs

2009 Value

Miles of Line

Year Built

Notes

$3M

$21.2M

2.5 Miles

1962

12 Million Passengers Carried

 

Yearly Operating Costs

# Passengers Per Year

Cost Per Passenger Mile

Retail Ticket Cost

Notes

Under Study

Under Study

Under Study

$15.00-22.00

2 – 80 Passenger “Rotating” Gondolas. 

 

Construction and Operating Budgets

Project Budgets

The proposed project will require several phases, each with its own budget and funding cycle.  See the links on this page for the budget projections for each of the project components listed below.

The Needs Analysis Budget

The first phase will be the formal needs analysis and feasibility study. “Preliminary Budget A” attempts to itemize the major cost centers of this phase.

Initial Design and Engineering Budget

“Preliminary Budget B” covers the initial system design and engineering including a “breakout” budget for the cost of developing any new technologies

Initial Construction Budget

"Preliminary Budget C" shows the overview of the Construction Budget.  Subsequent Component Budgets detail the projected construction costs of the initial system's diverse elements. 

Stations

The system will be comprised of a set of stations of various sizes and complexities.  “Preliminary Budget D” details these cost estimates.

Rights of Way Acquisition & Leasing

A large initial and on-going system cost component will be the fees to purchase and lease rights of way for towers, lines, and access roads.  “Preliminary Budget E” details the projected costs.

Towers

One of the largest variables in this system will be determined by the decision to either use existing designs for steel pole type towers, or whether to use larger, more costly concrete towers that could be used in later phase to support a monorail guide-way, for power transmission, or for cell towers, for example.  Concrete towers with moisture intrusion prevention may provide better survivability in fires or earthquakes and may resist ice jacking and wind sheer better than tubular steel towers in which one dent or crack in the skin can weaken the entire tower.  “Preliminary Budget F” details these cost factors.

Cables

The system will require up to 150 miles of cable with a provision for replacement in the capital costs.  “Preliminary Budget G” details estimated cable costs.

Gondolas

The system will require somewhat around 350 gondolas to span the line’s 45 miles. “Preliminary Budget H” details estimated gondola costs.

Service Facilities / Maintenance Barn

The number of gondolas and spares required will require a large storage space as they come off line in low demand cycles.  There must also be facilities to clean and maintain and to recondition gondolas.  “Preliminary Budget ” details estimated maintenance facilities costs.

Parking Structures

The number of open air and covered parking spaces is perhaps the largest land use issue other than the line right of way.  Sales of parking stalls will also be an important income stream.  “Preliminary Budget J” details estimated parking costs.

Auxiliary Power System

The initial power loads for starting the system (and the need for emergency / power outage operations capabilities) will require an auxiliary power source.  “Preliminary Budget K” details estimated power facilities costs.

Inter-modal Link Facilities

The tram system will need intermodal connections at many of its stations to inter-tie to the local TART bus system, the railroad, the local airports, and recreational sites.  These stations will need some baggage handling, storage areas and baggage forwarding systems.  Some stations will have vendor booths and other special services such as, bike lockers, rental vehicles, and even shower and locker rooms for sports users or concierge / valet services to serve up-scale area resorts.  “Preliminary Budget L” details estimated Inter-modal facilities costs.

Communications & Data Infrastructures

The system will require state of the art communications and IT infrastructures both internally for the system’s use and externally for user’s “wi-fi” access.  “Preliminary Budget M” details estimated Communications and IT facilities costs.

Security & Emergency Systems & Vehicles

The system will need both security and emergency evacuation protocols and systems, staffing, and facilities as well as a small fleet of snow cats, snow mobiles, and other equipment. “Preliminary Budget N” details estimated emergency facilities costs.

 

 

 

Potential Revenue Sources

There are many ways to amortize this investment:

One way to “do the math” would be to use the AAA-reported annual car ownership costs (tax, gas, and other operational costs - from $6,000 to $8,000 per year per car). Some portion of these car use-related costs could be avoided by tram users. An average car owner “invests” about $250,000 (for 20 years of car use).  Car owners could instead "buy" a portion of the system in the form of long term family or bulk commercial passes. 

Another “buy back” would be the lower carbon footprint – the system could potentially sell the “cap and trade” carbon values.

Another payback would be the cost-sharing from the major resorts, schools, and large institutional users. The local school district for example, spends almost $4 million a year to bus students.

Potentially increased California resident and international tourist dollars would add to the sales tax base, the TOT fees, etc.

The unique aspects of this system would add to our region’s attractiveness as a resort destination.

There may also be “pay-back” funding from some of the various shared cost savings or post construction revenue streams. Possible cost offsets would arise from:

  • Reduced road use costs - maintenance (less chained-tire wear and tear, less snow removal and sanding), less tire and oil run-off, less gas used and tailpipe emissions.
  • The potential for increased area-wide economic vitality would help keep Truckee-Tahoe “the” major California destination resort - creating more jobs for locals to build and run the lines and related businesses.
  • Advertising on the gondolas and at the stations would generate some revenue.
  • Cell and Wi-Fi rights on the towers and use fees could be revenue positive.
  • Utility (power and cable) lines could be strung on upper branches of towers and be part of the cost structure.

The Costs of Doing Nothing

  • At some point -- with ever increasing oil and environmental costs -- only the financially advantaged will be able to afford personal car ownership. 
  • With no personal or mass transit systems in place many areas will not be able to sustain their suburban, personal car-based systems for work, school, and shopping.
  • The continued environmental damage caused by spending up to 1/3 of our energy on personal transit – now deemed “acceptable” – will be unsustainable in an era of limited personal and governmental budgets.
  • 2004 University of Alaska study estimated that the U.S. could save between $27 to $73 billion dollars a year by eliminating its Persian Gulf commitments (of which roughly $6–$25 billion annually – or $0.03–$0.15 per gallon is attributable to motor-vehicle use).
  • The TRUE costs of doing nothing will be that we leave our children and grandchildren strapped to an expensive, destructive, and unsupportable personal car-based transit system with no clear alternatives to replace it with in the foreseeable future.

 

Component Budget Projections

Related Links

Revenue Sources and Projections