Some more thoughts on SEPTAI did obtain a copy of the SEPTA lease. I have absolutely no background in contracts,or anything of the sort, but, there are some key things I think are important to take from it, especially this one:
1) Section 1.08: Fares and Other Charges
The Authority shall have the absolute right to fix its fares and other charges.
That, obviously is pretty key in all of this. SEPTA, an organization governed by a 15 person board, of which the City has 2 members, has absolute power in Its fare structures. The City, which pays an approximately 56 million dollar subsidy to the organization a year, gets no say whatsoever, other than a largely symbolic veto that is easily overridden.
The whole issue is pretty complicated, but, I think a good way to think about the City's position is this: We paid for the Subway. I don't know the full details of the funding, but since the system was built before the large federal transportation bills were passed, I would guess that the City paid for a large percentage, if not 100 percent, of the construction. (Unlike today, where a city and state only have to pay a combined 20 percent, with the Federal Government paying the rest.) So, this was a huge system built by Philadelphia for Philadelphia residents. And therefore, we own this asset, and can charge a rent, a large rent, to someone for its use...
So, in 2004, how much does the City project to get from SEPTA in rent? How does zero sound? As far as I can tell, the City gets absolutely nothing for it. (I got this from the city's operating budget for fy 2004 .) The city has generally collected a million or two per year, but it looks like that has gone down to zero this year. When rent was paid from the city, it appears to come out of SEPTA's operating budget. (This point, in of itself is problemtatic. If SEPTA and the state had constructed the system, the money to pay for the tracks and stations would come from a seperate capital budget that includes huge federal infusions of money. But since we built, and they use it, they use operating expenses to rent it. That is why we should think about forcing them to buy it, it can force money out of a seperate money stream.)
So, we let SEPTA rent the subways for zero. And, apparently, we may be able to force them to buy it since the lease expires in December of 2005. How much would they have to pay? I have no idea. But, one aspect of the "worth" of the system of would be the replacement costs of building the same thing over again. Lets say SEPTA did have to start building all over, but SEPTA chose to build something far cheaper than a subway system, such as a light rail. Well, light rail, the cheaper alternative, costs an average of 70 million dollars per mile to construct. We have, between the Broad Street Line and Ridge Spur, the El, and the subway-Surface tracks, what have to be at least 25 miles of tracks. Just replacing these with the cheaper light rail would cost 1.75 billion dollars. That is billion with a B. Now, is it realistic that the State could or would come up with the up to 20 percent of that cost that they would have to contribute, 350 million dollars? No. But, we should just be clear that what we built and paid for is a huge, huge asset. If our reward for that asset is no say on how transit is conducted on those tracks, we have a serious problem.
Do any policy people have any thoughts about this? Do any lawyers/law students want to read the lease?