I just don't get these public transit projects:

The light-rail extension to UNC Charlotte is on schedule to open in 2017, but two uncertainties hang over the project - the local economy and budget-cutting in Washington, D.C. ...

CATS said it believes the project will meet the Federal Transit Administration's threshold for cost-effectiveness, and the transit system is upbeat as to how the train extension is progressing. ...

In January, CATS announced it was eliminating two stations at the end of the line to save money. The new plan has the line ending at UNCC rather than at Interstate 485.

That decision cut $203 million and brought the estimated cost to $967 million. But CATS said Monday the price has increased by $93 million, to $1.07 billion. The main reason is that the federal government told CATS it should include additional finance charges in its construction costs because the transit system might not receive federal money as quickly as in the past.

CATS needs the FTA to pay for half of the construction - $535 million. The N.C. Department of Transportation would pay for 25 percent - $267 million - with CATS paying for the rest.

According to the Blue Line Extension Fact Sheet [PDF], there are an expected 24,500 average weekday trips by 2035. Assuming that these begin in 2017 , they grow at a 0.5% rate until 2035, and assuming that the travel time savings is 20 minutes (the total trip time across the 9 stops is 22 minutes) yields an estimate of the annual time saved at 242k hours in 2017 and increasing to 6.4m and 8.4m in 2035 and 2046 (note that average travel time to work is 25 minutes in Mecklenberg County). Assuming an hourly wage rate of $27 (household income divided by 2000 hours) and attributing 100% of the wage to the value of time saved yields an annual benefit estimate of about $8.2 million in 2017 which grows to about $35m in 2046 (discounted at 2%). Note that most all of my assumptions are likely generous.

As far as I can tell the present value of annual benefits minus the construction cost and "estimated $11.5 million in operating costs" yield a present value of net benefits of minus $464m. That means that the benefits of lower congestion, stronger neighborhoods, improved environmental quality, etc. would need to cover the difference and then sum in order to make this look like a good project. If each household in Mecklenberg County is willing to pay $10 annually for these benefits (a round number guess), households grow at 2%, and future benefits are discounted at 2%, the present value of nonmarket benefits is $76m. The net present value is minus $384m. If each household in Mecklenberg County is willing to pay $100 annually for these benefits, households grow at 2%, and future benefits are discounted at 2%, the present value of nonmarket benefits is $793m. The net benefits are $330m and the benefit/cost ratio is 1.25. Note that it takes a very optimistic willingness to pay to make the project look like a good (not great) one.

Looking at this another way, the Blue Line Extension would need to save about 6 lives each year (a reduction of about 7.5%, valued at $6 million each), for the benefit/cost ratio to reach 1.25.

Instead of a cost-effectiveness rule, I think the FTA should use a benefit-cost rule.

What did I miss?