Economic Development and Travel & Tourism

Coast-to-coast passenger rail completes cost and ridership study

Early indications show support for a more detailed proposal.

March 4, 2016
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Passenger Rail
There are three passenger rail routes under consideration, all of which link Holland, Grand Rapids, Lansing and Detroit. ©Thinkstock.com

(As seen on WZZM TV 13) The wheels are in motion to revive a passenger rail line linking the east and west sides of the state.

The Michigan Environmental Council managed a $100,000 study conducted over the past year and prepared by Transportation Economics & Management Systems, which looked at the ridership potential and costs associated with operating passenger rail service between Holland, Grand Rapids, Lansing and Detroit.

The study is a precursor to a larger, more involved feasibility study that would need to be conducted before the project gets the go-ahead to move forward, but early indications show support for undertaking the more detailed study.

“We do feel there is enough support to move forward with a full feasibility study,” said Elizabeth Treutel, policy associate with the Michigan Environmental Council and project manager for the study. “We feel the ridership and cost forecasts are within a reasonable range.”

Treutel said the predicted modest ridership of 300,000 to 400,000 per year would support the service, and the anticipated capital costs of $130 million for a 186-mile rail service are reasonable for this type of project.

The study considered three potential routes, all of which would include stops in Holland, Grand Rapids and Lansing, but then differ slightly in how they get from Lansing to Detroit. Route one would run from Lansing to Jackson to Ann Arbor to Wayne to Detroit. Route two would run from Lansing to Howell to Ann Arbor to Wayne to Detroit. Route three would run from Lansing to Howell to Wayne to Detroit.

All three routes were selected because they encompass existing rail lines, which will help keep costs for the project down.

Based on the study, Treutel said the cost-benefit analysis was strongest for route two.

She said while route one has the highest potential ridership, it also would be the most expensive in terms of capital costs, while route two would have a lower but still strong ridership level and a lower capital cost and provide the greatest return on investment.

Treutel said despite the early indicators in favor of route two, no routes are being excluded at this point.

The study also compared costs associated with establishing 79-mph service versus 110-mph service.

According to the report, establishing basic 79-mph service on the 186-mile route two would require an annual subsidy of approximately $3 million and an upfront capital investment of $130.9 million. While 110-mph service would require a greater capital investment — $436 million — higher ridership would allow the service to recover its operating expenses and could generate more than $12 million in annual profits on route two if the route were running at a frequency of eight daily round trips.

In comparison, establishing 79-mph service along route one, which spans 202.8 miles, would cost $141 million, and for 110-mph service, the cost would be $540 million. Route one would require a subsidy of $4 million annually for basic 79-mph service, but could generate an annual profit of over $14 million with 110-mph service and eight daily round trips.

Treutel said whichever passenger rail line route is selected, it would likely start out with twice daily service at 79 mph and eventually be upgraded to 110 mph service. That means initially a subsidy would likely be necessary to operate the line.

“What is reasonable and most likely is the basic level of service. We probably are not going to come out of the gate with 110 mph service and eight trains a day,” she said.

“Your ridership is going to be a lot stronger when you have more frequency and faster service. If you do start out at a basic level, you’re going to have lower ridership, so you would more likely need a subsidy. So you could make the case that investing more up front could be better in the long run,” Treutel added.

The Michigan Environmental Council and other stakeholders involved in the Michigan By Rail coalition, which is also supporting the effort, will spend the upcoming year trying to build support for the service so they can begin seeking funding opportunities to support a full feasibility study, which is the next step in the process and will likely require federal grant funding.

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