The tracks and trains required for building a statewide passenger rail service are either available or, in the case of the required self-propelled, deisel-electric trains, easily acquired. Portions of the existing railroad track and crossings will need to be upgraded but the huge expense of acquiring the right-of-way to lay new track or electrify that track is avoided since 99% of what's needed is already in place.

Railroads – Ohio has nearly 6,000 miles of railroad track. It is one of the most heavily “tracked” states in the U.S., with more miles of track per square mile than any other state. There is a railroad in nearly every community of any size in the state. Every public university as well as most colleges and private universities in Ohio are situated next to or near a railroad track.

Figure 1. Self-Propelled, Diesel-Electric Train (Click to Enlarge)

Trains – an estimated 50 self-propelled, diesel-electric commuter trains (DMU), similar to the one shown in the picture to the right, will be needed to service a network of Ohio’s colleges and universities. Diesel electric trains can run on freight rail, are relatively inexpensive to operate and have been in widespread use throughout Europe and the rest of the world for decades. DMUs are usually in a “push-me, pull-me” configuration allowing the train to travel in either direction without turning. DMUs accelerate rapidly from a stop and can travel well above 80 mph, with some traveling well over 100 mph.

What will it cost to build the necessary train stations and to purchase 50 trains to run the network? And where will the funding come from to accomplish all of this?

Cost

There are two major expenses facing OHERN: 1) capital costs and 2) operating/maintenance costs. (N.B., the cost to upgrade railroad tracks, crossings and general rail infrastructure were not included in this estimate since it is assumed those costs will be paid for using separate federal and state funds.)

The two largest capital costs are for the acquisition of trains and the building of new train stations.

Issuance of a $400 million state bond will be required for these two capital costs. Servicing that bond is included in the ongoing annual cost estimates. The annual bond payment on $400 million for 20 years @ 5% is $32 million.

Operation and maintenance costs are based on numbers provided to the OHERN Institute by the city of Ottawa, Ontario. Ottawa operates a transit rail system connecting Carleton University to other parts of the city. Ottawa’s "O-Train” relies on a set of three self-propelled diesel-electric trains similar to the trains proposed for use by OHERN.

Ottawa’s “O-Train” operates year round from 6:30 am to midnight, seven days a week. The OHERN plan followed the lessons learned from the popular and successful system in Ottawa. The Canadian operating costs were considered a good benchmark from which to derive OHERN’s likely operating and maintenance expenses. After making the necessary adjustments for differences in US and Canadian currency and year, it is estimated that the annual operating costs for a 50-train system in Ohio would be approximately $80 million.

Therefore, each year’s combined cost to service the $400 million bond ($32 million) and operate and maintain the 50-train system ($80 million) would be $112 million. (Click here for additional details on costs.)

Revenue

There are three major stakeholders in the proposed rail system: 1) government (federal, state and local), 2) general public (transit riders), and 3) education (students, faculty and staff).

While a good case can be made that all three groups should help fund the system since all three will derive numerous indirect benefits and cost savings, for the sake of simplicity, no new tax dollars were included in the revenue model. In other words, a "user tax" model was adopted as the only method for funding OHERN.

Given the previously estimated annual cost of $112 million to build and operate the 50-train system, and the assumption that no federal or state tax revenues would be used for funding, the question becomes how much would students, faculty, staff and transit riders be required to pay to cover the system’s annual cost?

Again, a number of simplifying assumptions were made. To begin with, it was assumed that all students, faculty and staff at public institutions of higher education would be required to pay into the system. This “all in” solution is necessary since the original intent of the network is to increase collaboration and sharing of resources among Ohio’s schools by providing a year round, low cost, reliable, easy-to-use, campus-to-campus transportation system. Professors and students must all be participating in order for the system to make sense. For example, a professor can't expect all members of a class to meet the following week at the Art Museum in Cleveland if only half the class is participating in the OHERN plan.

Private colleges and universities can buy into the system at the same rate as public institutions. High school students also will be allowed to buy an annual pass for the same price as students in higher education. For this model, it was assumed the general public would pay three times the rate charged higher education.

Using the average price of a college textbook as a guide, the annual ticket price for higher education was set at $105. The price of an annual pass for transit riders was set at $315. These prices were set low, relative to existing transit costs, in order to justify the revenue model's assumption of "full participation" among colleges and universities.

Assuming full participation by public and private institutions, the “One Textbook Revenue Model” generates $81 million from higher education. The 573,000 students, faculty and staff in public higher education accounts for $61 million while their 195,000 counterparts in private higher education accounts for $20 million. A modest number of high school students (49,000, or 5% of Ohio's 13-18 age cohort) were included, generating an additional $5 million.

It was further assumed, an estimated 200,000 transit riders would purchase annual passes generating $63 million. An additional $1 million in revenue was included under a miscellaneous category.

Given these assumptions, the "One Textbook Revenue Model" generates $150 million annually, covering the network's annual cost of $112 million while providing a revenue surplus of $38 million. (Click here for additional details on revenue.)