Buffett vs. Streetcars in Omaha

The letter to the editor published in the Omaha World Herald was brief and to the point. Warren Buffet - the Oracle of Omaha and CEO of Berkshire Hathaway - is opposed to the half-billion-dollar streetcar proposal approved for downtown Omaha. At the very least, he'd like to see the measure put to a vote and if so, he'd vote "No."

Buffett's opposition to the proposal derives from his personal experience as a beneficiary of public transit measures and as a holder of bonds floated to finance public transit. According to him, the costs of such projects are almost universally underestimated and usage predictions over-estimated. Failure and disappointment are far more likely than success - and success is ill-defined.

Buffett acknowledges in his letter that it is "?ff-putting" for a wealthy 92-year-old to publicly oppose mass transit propositions. His preferred alternative to the streetcar proposal is for Omaha to simply modify or expand its Metro bus infrastructure.

Buffett's sentiments have been seconded by a former Omaha resident and current transportation consultant, Tom Rubin, who raises a host of questions regarding the funding formulas and tax impacts. And Rubin also questions rider projections. Rubin, too, would like to see the streetcar project either terminated or put to a vote.

The problem here is that transportation in Omaha, like so many other American cities, is auto-centric. Auto-centric cities tend to be ruled by point-to-point driving and parking decision making which invariably creates congestion, increases emissions, and often adds to fatal interactions between vehicles and pedestrians.

Cities make their transit decisions the way they do - i.e. without a public referendum - because there is a larger vision at work designed to enhance the overall livability of the metropolitan area and stitch together different hubs within the city where commerce, education, recreational, or shopping activities are taking place. This is precisely the case in Omaha where multiple new developments are set to spring up along the proposed streetcar line.

In this context, putting public transit to a vote is implicit in the decisions of the elected municipal leadership. While the entire population is served by public transit, it may be and it is in fact likely, that public transit will only be used by a minority of the population, students, white and blue collar workers, doctors and nurses, and tourists and other visitors.

I am reminded of years-ago bond referendums in support of the introduction and expansion of bus lines in communities surrounding Detroit, all of which but one were voted down. Detroit is bafflingly bereft of suburb-to-city public transit - to say nothing of the limited transit available within the city. The need in cities like Detroit and Omaha is obvious, but politicians have so far seen fit to leave the decision to fix the problem to voters - who consistently say "No." Like Mr. Buffett.

In a survey of 4,990 consumers in China, the U.S., and Western Europe regarding post-COVID-19 transportation usage behaviors and preferences, TechInsights found the U.S. badly lagging China and Western Europe in reported use of public transportation. All three regions showed significant increases expected in private car use for future transportation needs (see chart further down).

Streetcars are not the same as busses. Their fixed routes make them particularly suited to urban rejuvenation efforts and the creation of centers for conducting business or recreational activities. Streetcars help define a city's character whether that be New Orleans or San Francisco.

Many public transit systems - and it seems more and more each year - are made available to users for free. The objective is to pry consumers out of their cars - a not-so-simple proposition. Streetcars also contribute to the ability of residents to live and work within a city entirely car-free.

In other words, even though Omaha's municipal leadership has defined a funding scheme intended to entirely pay for and maintain the proposed system, it is not unusual for public transit systems to operate at a loss. The wider economic benefit and contribution to social equity is usually considered worth the deficit - even though Omaha is not planning to lose money.

Buffett got it exactly correct when he said it is offputting for a wealthy 92-year-old to oppose a public transit proposition. He is also correct in noting the potential expense and the potential for failure. But for residents in need of transit options, who may not own a car or can't afford an Uber or a Lyft, transit options can make the difference between personal or familial economic success or failure.

It is worth noting that cross-the-Missouri-River neighbor Council Bluffs is sufficiently excited at the proposed streetcar as to begin to explore Federal funding for a cross-river linkup with the Omaha streetcar line. It's that kind of thinking - embracing and expanding public transit - that can really contribute to reducing traffic, congestion, emissions, and roadway fatalities. It can also contribute to the vibrance of the urban core.

Omaha claims their funding model will avert any new taxes. Buffett and Rubin are skeptical. Streetcars at least make more sense than robotaxis or Tesla loops.