After one year, streetcar ridership exceeds projections. But will riders pay for the trip?

Nearly a year after Charlotte’s streetcar opened, the Gold Line continues to draw more riders than the Charlotte Area Transit System envisioned.

But as the city prepares to expand the Gold Line to Johnson C. Smith University to the west and to Sunnyside Avenue to the east, there is still one significant unknown.

Will people ride when they have to pay?

The 1.5-mile streetcar today is free. The city plans to charge the price of a one-way bus or train fare when the second phase opens in 2019 or 2020, which will make the line 4 miles. Today that fare is $2.20.

Atlanta’s experience with the streetcar could spell trouble for the city. At the end of 2014, the city of Atlanta opened a starter streetcar line similar to Charlotte’s. The Atlanta streetcar was free until the city enacted a $1 fare at the start of this year.

During the first six months of this year, ridership is down 57 percent compared to the same period in 2015, according to city of Atlanta data.

Charlotte’s streetcar is expected to cost the city $6.2 million to operate annually when the second phase opens. Like other transit systems, fare revenue is projected to cover only a small portion: $1.5 million.

That means even a dramatic falloff in ridership would account for only a small portion of revenue.

The streetcar line already is more expensive to operate than the predecessor bus shuttle line that ran along the same route. For a comparison, the streetcar will cover almost the same route as the Gold Rush shuttle bus service, which went from Johnson C. Smith to Central Piedmont Community College. Last year, the Gold Rush shuttle cost $895,400 to operate.

This fall, the City Council likely is to vote to award a construction contract for the second phase of the streetcar. They’ve already paid for design work.

Over the next decade, there likely will be votes on building a third and fourth phase – additions that would add millions of dollars in annual operating costs. The city’s general-fund budget, not the half-cent sales tax used for transit, is paying to operate the streetcar.

Former City Manager Ron Carlee, who advocated for the project, said the city pushed for this project to spur development similar to the light rail line. He said it’s about bringing “economic equality” to neglected areas of the city like Beatties Ford Road. The city hopes the Gold Line will spur developers to build apartments, stores and offices along the route.

CATS said it expects its ridership projections to hold, even when people no longer can ride for free.

Atlanta experience

Atlanta’s streetcar line is similar to Charlotte’s. It’s a 2.7-mile segment that runs from the Centennial Olympic Park in downtown to the Martin Luther King Jr. historic site.

Three years ago, when the Charlotte City Council was debating whether to move forward with its streetcar, Atlanta Mayor Kasim Reed spoke to council members and told them the investment would be worthwhile.

Since Atlanta’s streetcar opened, Reed has been criticized for the project, especially the drop in ridership once the city began charging $1 per ride.

Atlanta city spokeswoman Jenna Garland defended the line, saying the streetcar is “in the black and within budget for both FY15 and FY16. The Streetcar experienced an expected and routine drop in ridership when its $1 fare was implemented.”

Garland also said the city plans to build more streetcar lines to give people more places to go.

Washington, D.C.’s streetcar, which opened this year, also is offering free rides. The city plans to enact a fare, though when or how much hasn’t been announced.

One option to prevent a ridership falloff on a shorter streetcar line would be to offer a reduced fare.

That’s something Portland, Ore., does on its extensive streetcar system, offering a fare 50 cents lower than the regular bus or light-rail fare of $2.50.

Portland used to have free bus and streetcar rides in a “Fareless Square” area around downtown, but it stopped that program in 2012 because of a budget deficit.

CATS doesn’t have any plans to charge a reduced fare for the Gold Line.

CATS said it expects people will continue to use the streetcar even after having to pay. The transit system said its biggest customer base will be people using the streetcar to transfer to another bus or light rail.

“We believe those who currently ride CATS will not have a problem with the (Gold Line) going to a local fare service,” CATS spokesperson Krystel Green said.

Will people pay?

The city plans to award a construction contract this fall on the second phase of the Gold Line. The total cost of that project is $150 million, with the federal government paying half.

Included in that $150 million is a plan to spend up to $33 million replacing the replica green and yellow trolleys with modern streetcars, similar to ones used in Atlanta and Washington, D.C. The City Council might vote on buying the streetcars this summer.

A sizable number of people are taking advantage of the Gold Line being free.

Michael Walsh, who works on Trade Street, took the streetcar to eat lunch on Elizabeth Avenue recently.

Would he make the same trip if he had to pay?

“I think $1 is a good price,” he said about a trip that’s about 1 mile long. “If you took a longer ride (a regular-priced ticket) would be worth it. Two dollars is good if you are going from Plaza Midwood to Wesley Heights. That’s a bargain.”

James Wyler and David Becher took the streetcar to Elizabeth for lunch from uptown, a trip they said they might not make if they had to pay. But Wyler said when the streetcar is extended to the east, he might be more willing to take it to work.

“I live in Chantilly, and parking uptown is super expensive,” he said.

Maisee Lee, who works at Earl’s Grocery on Elizabeth, said the Gold Line has been a boon to the store and restaurant.

“We have a lot of people come up for lunch,” she said. “It’s been a big help.”

Higher operating costs

The questions of ridership and operating costs likely will factor into the discussion as the council considers future expansion of the streetcar line.

If council members decide to build the entire 10-mile streetcar line, the annual operating costs likely would be about $16 million in today’s dollars. The city also is discussing building a streetcar line to the airport.

Nationally, transit systems are measured by the federal government on metrics such as how much it costs to transport a person for their trip and how much it costs to transport them 1 mile.

The old Gold Rush bus shuttle wasn’t glamorous, but it was efficient.

In its last full year of operation, the fleet of shuttle buses cost $970,000 to operate.

When judged by how much they cost to carry a passenger 1 mile, they were cheaper than a bus and a little more expensive than the Lynx Blue Line.

The city has budgeted $6.2 million to operate the streetcar once the second phase is open.

Some of the increase is due to the Gold Line operating on weekends and weekday nights; the Gold Rush shuttle didn’t operate on Saturdays and Sundays, and service usually ended before 7 p.m. The streetcar route also will be 1 mile longer than the old Gold Rush bus shuttle.

But the higher costs also are due to the streetcar being more expensive to run than a bus.

The average Gold Rush shuttle cost per trip was $1.66. The shuttle also operated for free.

The average cost per streetcar trip is projected to be $4.84. If streetcar fare revenue is accounted for, the cost per trip drops to $3.67.

Development coming?

The driving force behind the streetcar is development. The city believes the Gold Line will entice developers, just as the Lynx Blue Line paved the way for thousands of new apartments in South End.

If the Gold Line attracts development, the new property tax revenue could make up for the money spent to build and operate the streetcar.

On the eastern side of the streetcar, much of the route on Central Avenue already is being gentrified through Plaza Midwood. Once the streetcar reaches Eastway Drive, there are opportunities for redevelopment.

On the west side, the Gold Line could spur development when the second phase opens, especially near Johnson C. Smith University and Interstate 77.

Most of the Gold Line’s route today already is developed, with government buildings lining much of Trade Street. On Elizabeth Avenue, developer Clay Grubb announced last year he would build 550 apartments at the corner of Elizabeth Avenue and Torrence Street. That project has been delayed.

Emily Ethridge, a spokesperson for Grubb Properties, said the firm is “still working with other partners to determine what the best timeline will be.”

This story was originally published July 15, 2016 at 6:07 PM with the headline "After one year, streetcar ridership exceeds projections. But will riders pay for the trip?."