HOME             THE PLAN             RESEARCH             WHO WE ARE            BE A PART OF IT            CONTACT US


A New Approach to Paying for Intercity Commuter Rail Transportation

At its most basic, the OHERN Plan is a different way of funding intercity transportation.  Whereas most rail and transit systems generate approximately a third of their revenues from the farebox and the remainder from tax subsidies, the OHERN plan relies instead on a user fee to pay most of the cost.  These fees are expected to buy, build, operate and maintain the system.  This model is different than most transit revenue models.  It’s application calls for a rethinking of traditional transportation assumptions, revenue sources and planning.

A number of Ohio universities (e.g., The Ohio State University and Cleveland State University) and many others around the country, such as the University of Chicago and Arizona State University, have reached agreements with metropolitan transit systems for discounted student  fares which can be paid through the university bursar. There are other universities where the student body has taken it upon itself to vote for raising student fees to add new transit options on campus and around the city (e.g., Bowling Green State University). 

And although no regional or statewide commuter transportation system funded by students, faculty and staff currently exists, it is nonetheless clear that students and universities see the value of travel choice given their willingness to pay more for increased mobility on campus and throughout their metropolitan area.  It is obvious that students and universities are philosophically inclined and economically capable of paying a user fee to fund increased transportation mobility, and, if given the choice, would likely do so in order to create an environmentally-friendly, efficient, statewide, campus-to-campus transportation network.

Cost and Revenue Models

The following cost and revenue scenarios serve only to illustrate.  They are like calculations on a napkin, intended to quickly answer some basic questions.

There are too many details, variables, assumptions and contingencies to allow for a complete financial plan.  Fortunately, just such planning was completed in 2009 by the Ohio Rail Development Commission (ORDC) as part of its successful $400 million proposal to the Federal Railroad Administration (FRA) seeking funding for what was called the Ohio Hub Plan.  The $400 million award from the FRA to Ohio for the first leg of the Ohio Hub Plan was rejected only months after receipt of the award by then newly elected Republican Governor John Kasich on grounds the plan’s revenue model was insufficient to fund the proposed passenger rail system. 

Rather than abandoning the Ohio Rail Development Commission’s plan for passenger rail, the OHERN Plan builds on those successful documents completed for the Ohio Hub Plan.

The cost and revenue scenarios are intended to paint in broad strokes what the financial picture might look like if OHERN were to be implemented.  The basic questions:  Does it make financial sense?  If Ohio colleges and universities banded together to create this network could they raise enough money through user fees to pay for everything?  How many train sets would be needed and how much do the trains cost?  How much will it cost to operate and maintain the system?  Is there enough money to service a large state bond that would be required to pay for the train sets and build the necessary train stations?  How much will students, faculty and staff be asked to pay each semester?  Answers to these questions should give us a sense of whether or not the plan is economically feasible.

Throughout the following scenarios certain assumptions and financial data generated by the Ohio Rail Development Commission (ORDC) were used as input.  These data can be found in the official “Ohio Intercity Passenger Rail 3C ‘Quick Start’” 2009 summary application to the Federal Railroad Administration.

Hypothetical Cost Scenario

There are two major expenses facing OHERN: 1) capital costs and 2) operation/maintenance costs.

The costs of upgrading railroad tracks, the addition of new sidings, improved crossings and other rail-related infrastructure upgrades were not included as capital costs in the following cost scenario - the assumption being that state and federal dollars would be directed to these projects given the larger public and private benefits realized from the expansion and improvement in the rails used for freight traffic.

The two largest capital costs associated with OHERN are 1) the acquisition of new train sets  and 2) the cost to build new, or restore existing, train stations.  To pay this capital cost, the state will be required to issue a bond.  Servicing that bond is included as part of the ongoing annual cost. 

Annual operation and maintenance costs are based on official estimates reported by ORDC in the “Ohio Intercity Passenger Rail 3C ‘Quick Start’” application.

Using ORDC data coupled with additional assumptions regarding number of train sets and stations, the following estimates were obtained:

  1. Approximately $37.9 million dollars would be required annually to service the $521 million bond needed to purchase train sets, construct maintenance and layover facilities and complete station construction at participating colleges and universities. 

  1. Operating and maintaining the 20-train network would require $116.4 million annually.

  1. The annual cost to purchase equipment and operate the system totals $154.7 million.

OHERN Annual Operating/Maintenance Cost and Capital Cost

- Assume 20 train sets will be required to service a statewide intercity rail network

  1. -Apply per-train operating cost estimates using ORDC’s 3C ‘Quick Start’ Plan data


Operate and maintain 20 train sets at an average annual cost of $5.84m each     $116.8m

(The $5.84m includes track maintenance and all operations, salaries, fuel, etc.)


Purchase 20 three-car train sets @ $15m each                                  $300m

Equipment Maintenance and Layover Facilities                                     $75m

Construct/upgrade 40 stations at an average of $3.64m each            $146m

Total Capital Cost                                                                               $521m

Annual cost to service the $521m, 20yr bond @ 4%                                                $37.9m

Total annual operating/maintenance & debt service cost                               $154.7m

Hypothetical Revenue Model

Given the estimated annual cost of $154.7 million to build, buy and operate a passenger rail network with 20 train sets, and the assumption that no federal or state tax revenues would be used in its funding, the question then becomes, how much revenue must be raised from user fees and the farebox to pay the system’s annual cost?

Again, a number of simplifying assumptions were made. It is assumed that not all colleges and universities would vote to participate in the plan, but that the large majority would (i.e., 80%).

Students, faculty and staff at participating schools would pay a $100 a semester fee during the academic year and $50 during the summer semester.  Summer school populations are assumed to be 25 percent of academic year populations.

Basing farebox revenue on ORDC numbers, It is further assumed, an estimated 1,912,000 passenger trips would be made each year in a fully developed statewide rail system.   

OHERN Annual Revenue Model


Public Higher Ed. Student Population (472,000 x .8 x $200)                       $50m

Public Higher Ed. summer Pop. ((472,000 x .8) x .25) x $50)                     $4.7m

Public Faculty/Staff Population (101,000 x .8 x $200)                                 $16m

Public Faculty/Staff summer pop. ((101,000 x .8) x .25) x $50)                     $1m

Private Higher Ed. Student Population (165,000 x .8 x $200)                    $26.4m

Private Higher Ed. summer pop. ((165,000 x .8) x .25 x $50)                      $1.6m

Private Faculty/Staff Population (est.) ((30,000 x .8 x $200)                        $4.8m

Private Faculty/Staff summer pop. (est.) ((30,000 x .8) x .25 x $50)              $.3m


Ohio Population, age 13-18 (49,000 x $200)

(Assuming 5% participation rate among high school students)                     $9.8m

Total Revenue from Secondary & Higher Education Sources                             $114.6m


ORDC ridership estimate and revenue for the 3C ($11.2 x 4)                    $44.8m

Total Revenue transit riders & misc.                                                                     $44.8m

Estimated Total Annual Revenue                                                            $159.4m


Discussion of Findings and Assumptions

The revenue model annually generates $159.4 million.  This revenue covers the network's cost of $154.7 million, providing a surplus of $4.7 million.

As previously noted, the costs estimates were based largely on data obtained from Ohio Rail Development Commission documents.  Numbers were modified where appropriate.  Deviations from official numbers are explained below.

Relying on ORDC maps, rail corridors throughout the state were easily identified.  Five new corridors were added to those previously laid out by ORDC.  The five new corridors are highlighted in light green below.  Four of the five corridors were added to service Miami University, Shawnee State University, Ohio University, University of Akron and Kent State University.

Following the logic used in determining the number of train sets required to service the 3C corridor, trains were allocated to the remaining corridors around the state.  The Toledo to Fort Wayne Corridor was not included since a 60 mile portion of that line is out of service.  The numbers next to the various corridors represents the train sets allocated to each line.  It is estimated that twenty trains sets are required to fully populate the system.

Train Set Cost:  ORDC train sets were to be DMUs configured in “push-pull mode.”  Each set would consist of five cars - two being locomotives on each end, two passenger cars and one lounge car.  Each set was estimated to cost $35 million, which included a 30% contingency fee.  The OHERN train sets will also be DMUs arranged in a “push-pull mode,” however, rather than five cars, each set will consist of three cars.  An estimate of $15 million per set was used in the OHERN cost model.  This figure was used instead of the ORDC numbers based on recent personal communication with U.S. Railcar officials for the three car configuration.  No contingency fee was included in the train set cost.

Equipment Maintenance and Layover Facilities:  ORDC allocated $55 million for construction and equipment of stand-alone layover and maintenance facilities required for the trains. A shop and repair facility was planned for Cleveland to perform all maintenance, repairs, washing, fueling and sanding.  In addition to the facility in Cleveland, layover and turnaround facilities were to be built in Columbus and Cincinnati.  OHERN further budgeted $20 million for an additional layover and maintenance facility to be located in Toledo.

Station Cost:  The 3C ‘Quick Start’ plan called for funding for what it called “basic” station construction.  This included a covered passenger waiting area, platforms, passenger and vehicular access, landscaping and parking facilities.  Local communities were expected to pay for the construction and ongoing maintenance costs of station enhancement at their discretion.  Eight stations were scheduled for either new stations or improvements at a total costs of $29.1 million.  The average cost for each of the eight stations was $3.86 million, which is the source of the number used to multiply by the estimated 40 stations that would be required for the complete system.

Operating Cost:  ORDC average operating estimate per train set was $5.84 million.  This figure was based on a schedule of operation from early morning to early evening.  Track and right-of-way would be maintained by the freight companies with those costs paid by the network. Maintenance costs were include as well, as were train operations, crews and supervision costs.  Although OHERN train sets are smaller and therefore less expensive to operate and run, the ORDC figure was used in the OHERN cost estimate.

Ridership.  The Ohio Hub Plan estimate for ridership in the first year of the 3C corridor was 478,000 passenger trips.  That number was expected to grow annually for several years then level off.  The OHERN revenue scenario is based on a fully developed system with all corridors in place and as such the revenue model reflected that expansion by increasing the 3C passenger trips by a factor of 4, producing the 1,918,000 passenger trip estimate.

Using the average price of a college textbook, i.e., ~$100, as our guide, the user fee paid each semester was set to $100 and $50 for the summer term.

Private colleges and universities will be equal partners in the system, paying 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, although their schools will not be required to fully participate, as required of higher education.

There are more than 150 colleges and universities in Ohio and another 150 for-profit colleges that would qualify to participate.  However, only the student enrollment numbers from the 150 non-profit colleges and universities were included in the revenue estimates.

The model assumed an 80% participation rate among public and private institutions. 

The ORDC revenue estimates included a number of additional revenue sources that increased the 3C’s overall revenue estimate.  None of those revenue sources were included in the OHERN revenue model but would certainly be considered as part of a larger and more detailed financial plan.

             OHERN Institute  •  Bowling Green, Ohio 43402  •  A Research Division of All Aboard Ohio