■. r iPJiiladelphia (City).<^ransit,/ [Miscellaneous riublieations,] ST'P y ^study and review of the problem of passenger transportation in Philadelphia by a imified system of Iines./l9l6, ^ r ^ /LU^Tli/" * "^ irpartinent of ffiity iSranatt A STUDY AND REVIEXA/ OF THE PROBLEM OF PASSENGER TRANSPORTATION IN PHILADELPHIA BY A UNIFIED SYSTEM OF LINES AN ANALYSIS OF THE PLANS PROPOSED FOR ITS SOLUTION WITH SUGGESTED METHODS FOR THEIR IMPROVEMENT BY WILLIAM S. TWINING DIRECTOR SUBMITTED TO THE SELECT AND COMMON COUNCILS OF PHILADELPHIA MARCH 29, 1916 BUREAU OF GOVERNMEffTAl RESEARCH LIBRARY AA LIBRARY BUILD»NG ^ w" ipparlmrnt of (Eity Srauatt ) A STUDY AND REVIEW OF THE PROBLEM OF PASSENGER TRANSPORTATION IN PHILADELPHIA BY A UNIFIED SYSTEM OF LINES AN ANALYSIS OF THE PLANS PROPOSED FOR ITS SOLUTION WITH SUGGESTED METHODS FOR THEIR IMPROVEMENT BY WILLIAM S. TWINING DIRECTOR SUBMITTED TO THE SELECT AND COMMON COUNCILS OF PHILADELPHIA MARCH 29, 1916 BUREmJ OF GOVERNMENTAL RESEARCH LIBRARY 44 LIBRARY BUILDING CONTENTS Page etter of Transmittal 3-6 eneral Discussion of the Transportation Prob- lem 7-15 Elements of the Problem 7 The Service Element 7 The Fare Element 8 The Fire-Cent Fare Policy 9 Independent Operator of City's Lines 11 Burden not Realized Now 13 Legal Questions not Discussed 13 Data Forming Basis of This ReiJort 13 (Jeneral Principles 13 The Financial Difficulties of the Problem of City-owned Lines 13 Why Does the City Engage in This Experiment? 14 Why Called an Experiment? 15 Main Issues 15 Study of the Rapid Transit Problem in Phila- delphia with Suggestions for its Proper De- velopment (Summary of Report) 17-30 Suggested Improvements in the Program 19 Issues 20 History and Analysis of the Plans for Rapid Transit Development in Philadelphia, 1913- 1916 31-33 Outline of the Case 21 Former Taylor Plans Analyzed 23 Taylor Plans — Comparison of Previous Recom- mendations 23 Taylor Plans — ^Comparative Merits of the For- mer Plans 29 The Taylor Plan— Its Ideals 30 The Taylor Plan— General Defects 30 The Taylor Plan — Suggestions for Attaining the Ideal 31 Loan Bill and Ordinances Under Which Con- struction was Authorized 31 Present Situation Complicated by Past Mis- takes 33 The City's Financial Standing — Improvement Which Will Result if the Burden be Placed Upon the Car Rider 33 Financing of the Project 33 'he Present Plans for Rapid Transit Develop- ment 35-43 Definition of the Taylor Plans » 35 Construction Program of Taylor Plan 37 Objections to the Construction Program of the Taylor Plan 37 Page The Proposed Operating Lease of City-built Lines 38 Transfers Between Lines 41 General Discussion of Rapid Transit Lines 45-57 Advantages of Rapid Transit Lines 45 Results Due to Location and Routing 45 The Broad Street Line and Loop 4fl Objections to Loop 46 Through-Routing 48 The Ideal Local Transi>orta.tion System for n Population of 3,000,000 Within a Circle of 13-mile Radius 48 Ideal System (A Unified Plan of Operation) Applied to Philadelphia 50 The Middle Zone of the City and Its Transpor- tation Problems 51 The Suburban Zone Service 51 Effect of Rapid Transit Lines in Distribution of Population 52 Discussion of Principle of District Assessment for Local Benefits 53 How are the Bills to be Paid for Constructing and Operating the Rapid Transit System?... 55 Trunk and Terminal Lines to be Financed by City Bonds 55 Branch Lines and Extensions Proposed 4,0 be Financed on Principle of Assessment of Local Benefits 55 Alternate Method of Financing Branches and Extensions of the Trunk Portion of the Sys- tem 56 Suggested Improvements in the Plans for Rapid Transit Development 59-69 Suggested Improvements in the Construction Program of the Taylor Plan 59 Suggested Construction of Comprehensive Sys- tem in Successive Steps 60 Construction Step No. 1 60 Construction Step No. 3 60 Importance of Erie Avenue as Temporary Northern Terminal of Broad Street Lines... 60 Walnut Street Line 61 Temporary Stub-End Terminals 61 Train Capacity 61 Reasons for Constructing Four Tracks on Broad Street 63 Construction of Camden Tube 63 Successive Steps and Extensions in the Future. 63 Time of Construction and Operation 63 Page Suggested Improvements in the Plans for Rapid Transit Development — Continued. Comparison of Cost of Construction — Amount of Loan Suggested 63 Why is Construction in Progressive Steps Ad- vised? 64 EfEect of Gradual Construction by Steps on the Lessee of City's System 65 Reservation of Space in Broad Street for Through Lines of the Pennsylvania Railroad. 6B Change of City Hall Station 66 Change of Existing Contract for City Hall Sta- tion 68 Financial Operating Statistics 71-74 Estimated Financial Results of Operation Un- der Various Plans of Construction and Lease. 71 Financial Consequences of Operating Deficits.... 75-78 Probable EfEect of the Transit Program of City Taxes 75 How are These Deficits to be Met? 75 Who Should Carry the Burden of Deficits Re- sulting from a Unified System? 76 What Adjustment of Carfare Would be Neces- sary to Make the Unified System Self-sup- porting? 78 Appendix A. Building of Rapid Transit Lines in New York City by Assessment Upon Property Benefited. 87-90 Appendix B. Paying the Bills for City Planning 91-93 Appendix C. Memorandum as to Legal Status of Assessment for Rapid Transit Development in Pennsyl- vania and City Solicitor's Opinion 95 No. Statements. Page 1 Taylor Plans Analyzed — Comparison of Re- sults Based on Recommendations — Reports of Transit Commissioner and Department of City Transit — Operation by Philadelphia Rapid Transit Company Assumed 23-25 3 Comparison of Fundamental Features of the Different Taylor Plans 26, 27 3 Comparison of the Financial Feasibility of the Rapid Transit Systems Discussed in This Report 28 4 Comparison of Taylor Plans 42, 43 5 Comparison of Financial Results to the City from Operation Under Different Plans. (Operation by Philadelphia Rapid Transit Company) — (Camden Tube Not Included). 79 6 Comparison of Financial Results to the City from Operation Under Different Plans. (Operation by Philadelphia Rapid Transit Company) — (Camden Tube Included) 7 Comparison of Outlay — For 3-Year Period . . . 8 Comparison of Total Investment (City and Company) and 1913 Population Served by Steps 1 and 2 of Modified Program as Out- lined in this Report with Taylor Plan 9 Average Fare per Revenue Journey Received by the Philadelphia Rapid Transit Com- pany from 1900 to 1915 10 Estimated Average Fare Required per Rev- enue Journey During 1915 if Lines Assumed for Plan No. 16 of 1915 Annual Report of Department had been in Operation 1 1 . Estimated Average Fare per Revenue Jour- ney Necessary to Support Entire Taylor System if in Operation in 1915 , 12 Estimated Average Fare per Revenue Journey J Necessary to Support Broad Street Line, .! Delivery Loop, Frankford Line to Rhawn Street and Darby Line Maps. P^ Frontispiece : Subway and Elevated Lines for Suggested Unified System and Plan of Through-Rout- ing for Comprehensive System (Operation by Philadelphia Rapid Transit Com- pany) Facing No. 1 Subway and Elevated Lines Suggested for Independent (Competitive) System and Plan of Through-Routing for Comprehensive Sys- tem Facing 2 Plan for Rapid Transit Development in the Business District Facing 3 Ideal Transportation System as Existing in West Philadelphia Facing 4 The Increased Area Brought Within the 30- Minute Time Zone from the Business Dis- trict by Steps 1 and 2 Facing 5 Trunk and Terminal Sections of Rapid Tran- sit Lines to be Financed on City Bonds and Extensions to be Financed by Local As- sessment of Benefits Following 6 Revised Location — Broad Street Subway — City Hall Station Facing 7 Broad Street Subway — Showing Distribution of Race Street, City Hall and Chestnut Street Stations Following DiAQEAMS. Page Diagram Illustrating Function of Rapid Tran- sit Lines in a Unified System and the Principle of Through-Eouting 48 Diagram Showing Application of Principles Applied to Existing Conditions in West Philadelphia 49 Percentage Distribution of North Broad Street Passengers (Inbound) at Delivery- Loop Stations, Taylor Plan Facing 46 An Ideal Transportation System Facing 50 Application of Ideal Rapid Transit System to Conditions in Philadelphia Facing 50 Comparison of Daily Passengers at Various Stations on New York and Philadelphia No. Page High-speed Systems (One-Way Traffic^ Boarding) Facing 60 5 Modified Rapid Transit System with Through- Eouting Facing 63 6 Actual Fare Requirements of Unified Sys- tem Assumed Under Plan No. 16, 1915 An- nual Report of Department of City Tran- sit ; also showing a Suggested Program of Fare Adjustment, 1920 to 1950 Facing 78 7 Results to City (Estimated) from Operation of Unified System Under Different Plans on 5-Cent Fare Basis, Camden Tube Not In- cluded Following 09 fd/. CHASE SUBWAY AND ELEVATED LINES (Steps I and 2 shown in Red) for SUGGESTED UNIFIED SYSTEM and Plan of THROUGH-ROUTING FOR COMPREHENSIVE SYSTEM (Operation by Philadelphia Rapid Transit Company) tCENO ELtVATEO — ^ ^ suewAT EXISTING TRACK NEWTRACK EXISTING TBaCH NE'AT TnACK FRONTISPIECE To THE Select and Common Councils of the City of Philadelphia : Gentlemen : — Iiitroductory to this, uiy first report on the Rapid Transit Problem iu Phihidelphia, it may be well to state that it is submitted in compliance with the Act creating the Department, which states : "The Director shall, from time to time, make such recommendations to the councils of said cities, as to him shall seem proper, for the improvement and de- velopment of the facilities for transportation of persons and j^roperty within said cities." When I accepted this office under the City government, I had definite ideals and convictions regarding the principal features of the transportation problem of Phila- delphia, l)ut I had no intention then of issuing a report of this character. Further study of the situation, however, has shown me that a report is needed, primarily in order to explain my motive and purpose in suggesting some changes in the details and the financing of the plan for transit development now before the public, popularly known as the "Taylor Plan;" also to make clear some of the technical and financial features of that plan, and to advise City Councils what methods of executing it I consider are rational and business-like, and will tend toward the final attainment of the ideal which is so much desired. The transit problem in Philadelphia is a real problem, and the solution of it is a vital issue. The problem may be expressed as a question, "What can be consistently done, and what shall Ite done, to improve the transportation facilities of our City to provide for future growth, and how, when and where shall such facilities be provided?" The original "Taylor Plan" as published in 1913 was the result of a year and a half of study and investigation of Philadelphia conditions and was supposed at that time to be a complete answer to the problem. No competent authority will assert that any general plan of such scope and char- acter is absolutely final and perfect; all such plans must be altered and amended to suit new ideas, new conditions and new data. As evidence that this is true as applied to the "Taylor Plan," I quote the first paragraph of the 1914 Report of this Depart- ment: "In order to outline the present status of the project for which this Department was established, I call to your attention the recommenda- tions of my previous report, as partially modified and enlarged by addi- tional recommendations which are referred to at length herein." Two revisions of the original plan have been issued by Mr. Taylor, the former Director of this Department, and the main features of the final plan of 1915 are ex- cellent in their conception. Different oiiicials draw different conclusions and form different opinions from the same data, and in this report I submit suggestions which, in my judgment, will amend and improve the plans already published. This report is supplemental to those that have preceded, and may be considered as a fourth edition of the "Taylor Plan," differing in no essential features — only in de- tails and policy — from the latest plan as issued iu the 1915 Annual Report of this Department. The ideas presented herein are set forth with the sincere desire to secure to Philadelphia the best obtainable transportation service. In view of my relation with this Department for the last three and one-half years, as a member of the staff of Ford, Bacon & Davis, Consulting Engineers to the De- partment, it seems unnecessary to state that I do not entertain the slightest oppo- sition to the general plans already proposed. The transportation problem of Philadelphia is a business and municipal one, and the solutions presented in this and former reports are the personal opinions of in- dividuals who are honestly striving to serve the City to the best of their ability. I wish to state clearly and emphatically that I have no desire or intention to recommend any curtailment of the comprehensive program of rapid transit develop- ment outlined in the former reports of this Department. I realize fully the value and great amount of work done by Mr. Taylor, my predecessor in this office, in procur- ing the enabling legislation and thereby starting this important enterprise. I appreci- ate the great difficulties with which he was confronted, and having had a small part in planning this work, have tried in this report to so continue his plans that the ideal may be eventually realized. I am heartily in favor of the construction of each and every one of the radial lines or routes which have been recommended, if, as, and when authorized by the citizens. Acting as the legal consulting engineer for the City Councils in transit matters, it is my duty to assist them to obtain for the public such benefits as are practically possible — not to obstruct or delay any plan or its execution. This Department certainly will not oppose the construction of lines anywhere and everywhere so long as the citizens realize and are willing to assume the resulting bur- dens. They alone must determine the extent to which they wish to furnish funds for building such lines. The Director of this Department cannot nullify or modify the acts of the citizens or their representatives in City Councils. Professional ethics demand that a report of this kind shall present the truth, and the whole truth, in regard to the subjects discussed. This report aims to fulfill that de- mand in regard to the transportation problem of Philadelphia as the Director sees it. This report is not to be considered in any way as either a personal or political attack, or criticism of plans originated under the former administration. It is made only to serve the best interests of the City. Although this report assumes that the present system and the new City-built lines will be operated as a unified system, it must not be overlooked in considering the problem that the City has no legal power to force a lease of its high-speed system upon the present Company. The threat of a ruinous competition is the principal weapon which the City may use in order to compel the execution of a lease of the new lines by the present Company. An engineer's work is principally constructive. His aim should not be the de- struction of either physical or financial property, but its conservation. This is an engineer's report on a transportation problem, an experiment unique in many features, and is intended to give such facts, advice and technical data as the public may need in order to understand the fundamental difficulties inherent in an enterprise which even its most enthusiastic advocates admit must burden for years to come either the taxpayer or the car rider, as may later be determined. It aims to point out some fallacies popularly believed, to make some suggestions that should be helpful, to bring out such facts as have not heretofore been generally known— or, if known, not appreciated as to their importance— and to serve the people and the best interests of the entire City of Philadelphia. In its preparation I have given much study as to how the burdens and benefits which the lines will produce .should be distributed, and suggestions are herein presented. While in this report a program of construction is advised which calls for the authorization at this time of only $35,000,000, I feel that the determination of the amount that shall be authorized is a matter that rests entirely with the citizens and their representatives in City Councils. I would suggest, however, that this item be placed in the loan bill for the purpose of rapid transit development with a broad authorization following the general word- ing of the Act, i. e., "for the construction and improvement of subways, tunnels, rail- ways, elevated railways and other transit facilities," or if this be considered inadvis- able or inexpedient, the item may be worded as follows : Item — Towards the construction of subways, tunnels, railways, elevated railways and other transit facilities along any or all of the following routes : Frankford Line, Broad Street Line, Parkway — Roxborough Line, Darby Line, Together with any or all branches and extensions of same. If legally possible, I advise that the lines be divided into sections, as has been done in this report, and the people permitted to vote on each section of the plans indepen- dently, the estimated cost of each section being apportioned in the loan. In this way a definite expression can be obtained from the citizens as to their attitude toward the transit problem as a whole and the extent of their interest in tlie individual lines. I realize that the public in general does not possess the proper technical knowl- edge and training to enable it to decide intelligently as to the merits of the suggested alteratiiMis in routing, station locations, etc. Some of these changes involve problems of railroad oi^eration as well as construction. In addition, the public is often swayed as to its judgment on such matters by sentiment. The decision as to all such matters affecting this problem should not be influenced by personal, political or sentimental consideration, and as all plans must by law be submitted to and finally approved by the Public Service Commission of the State, I sug- gest that, in order to avoid delay, the Commission be requested to review this situation as far as their powers permit and render a decision as to these details as soon as pos- sible. I take this opportunity to thank my assistants in the Department for the efficient aid they have rendered in the preparation of this report and their earnest endeavors to aid in the solution of this public problem. Respectfully submitted, March L'!», 11»1G. Director. GENERAL DISCUSSION OF THE TRANSPORTATION PROBLEM Elements of the Problem. The entire transportation problem of the city contains but two fundamental elements — service and car fare — what kind of service do the people want, and how much are they willing to pay for it 1 It is a purely economic problem, the service demanded by the public constituting the cause and the car fare the effect. If looked at from the other direction, and the car fare be fixed, the resulting service will be automatically determined. Rapid transit facilities are simply one element of service in the general transportation prob- lem of the City. As the quality and amount of service rendered by a system must be a large factor in determining the car fare, it may be said that the control and solution of the entire problem centers in the fare. The Service Element. The prominent element of this problem as the public ordinarily regards it is the service to be rendered. They regard the fare as fixed. But that it is not fixed and that it varies with the cost of the service rendered will be shown in this report. The term service has been defined as an agency for the accomplishment of some constantly needed work or the supply of some recurrent demand. Transportation service in the mind of the public is graded according to the degree in which it possesses each of the elements of frequency, regularity, reliability, accessibility, speed and comfort. In considering the service requirements of a city the population must be divided, not into wards or political divisions, but into zones of density and distance from the center of the city — into economic divisions. The term "Unified Service" as used in this report means a joint operation of surface and rapid transit lines in such a manner that each shall as nearly as possible render the service in which it is most efficient and to which it is best adapted. The terms of such operation must be fixed by agreement or law when ownership of the lines is not joint. The cost of transportation service is the sum of the costs of supplying each of these ele- ments continuously to such a degree as will meet the public demands. The quality of the service depends on the proper adjustment and balancing of these ele- ments to the traffic. The capacity of a system to supply service rarely interests the public except as it affects their comfort. If added only when and as needed it affects the cost of service positively through the investment required to obtain it, and negatively by the better operating conditions. Rapid transit lines when added to an existing surface system increase its capacity and usually increase the cost of service. In return they improve the sei-vice rendered in limited areas by an increase of speed and comfort of travel. Passenger capacity of a surface system is the product of many factors and may be meas- ured by the maximum number of cars that can be actually operated through the congested district during the ' ' rush-hour, ' ' multiplied by the number of passengers per car. Before full Ccapacity of the lines in a district is reached relief should be obtained by the addition of rapid transit lines. As the improved service increases the speed and comfort of travel and the accessibility of the congested area, such area becomes more attractive and grows at the expense of other sections. Hence a vicious cycle exists which produces problems for city planners and transportation engineers to solve. Capacity is always reached first in the busi- ness district on account of the focusing there of many lines, more or less radial. The existing system in Philadelphia is approaching the limit of its capacity in certain lim- ited sections of the business district. In this report the cost of unified service has been estimated carefully, assuming different terms of lease and giving such weight to each of the elements as is considered to meet Philadel- phia requirements as to quality. The cost must always include a proper return upon the value of the plant used in the service. A discussion of the elements of transportation service is beyond the scope of this report. The Fare Element. The fare on any transportation system is the result of the cost of the service divided by the number of passenger journeys. The fare is thus seen to vary directly with the cost of the service and inversely with the number of passengers. Expressed in a formula, it is: Total cost of the service ^^11 .^ 1 ^ =The average actual fare per journey. Number of complete journeys Prom this formula, with any two elements known the third is readily found. In this discussion the term "car fare" is as defined above, and means the average fare re- quired to siipport the service. The actual fare collected on the cars may or may not be what is here called the "fare." From this it is evident that the passenger fare required to support the service is not a fixed amount ; it varies from day to day, from year to year, and is different in each section of the city. Like many other elements of this problem dealing with the city as a whole and con- taining so many variables, the average fare required must be used, and is so considered in this report. If the fare collected be in excess of the fare as determined by the formula, a surplus will result, available for distribution between the City and lessee according to the provisions of the lease of the lines. If the fare collected be less than the fare as determined above, a deficit must result. The actual fare is fixed hy economic conditions — the fare paid is fixed by City ordinance or the operating company. Diagram No. 6 (facing page 78) shows the difference between the two as applied to the Philadelphia Rapid Transit Company (actual since 1900) and the estimated average fares re- quired up to 1950 for the unified system known as No. 16 of the 1915 Report. Statistics show that with any given system, once it be constructed, the increase in passen- gers is usually larger than the corresponding increase in the cost of service, and thereby a gradual reduction in the fare reqiiired becomes possible as the traffic on the system approaches the capacity for which it was designed. The proposition to build these lines out of City funds largely arises from a vague idea in the public mind that if the City builds these lines, a 5-cent fare will render the service profit- able now. This is a misconception, for the resulting rise in car fare takes place the same as though the lines had been built by the Company. The fact that the rider pays only 5 cents does not prove that the fare to support the service has been only 5 cents. A deficit resulting from this ear fare appears first as a deficit in the City's interest, next as a deficit in the City Treasury, next as an increase in taxes on real estate, and lastly in the form of rent or increased living ex- penses, thus reaching the citizen by an indirect route. He has paid the increased fare (the excess of cost of service over 5 cents), but not in a direct way. The estimates made in this Department show that the ideal condition, the profitable oper- ation of the unified system on a 5-cent fare, may eventually be actually possible. It is not possible now — the actual fare on the existing system in 1915 being 5.166 cents per journey, and, with the exception of three years when strip tickets were in use, the fare per revenue journey has exceeded 5 cents since 1895. Citizens should not delude themselves into the belief that the average fare is only 5 cents now, and that it will be only 5 cents with the City as a partner in the enterprise, notwithstanding that it may be so agreed upon and stated in the lease, because they must pay the full fare in one shape or another, whatever it may be. The mere fact that the rider does not pay it on the car should not blind him to the fact that the cost of service must be and always is paid in full in some way. The Five-Cent Fare Policy. It becomes necessary for the City to lend its credit in financing a public utility, in which the income does not meet the cost of service, only because the City can transfer the resulting loss to the citizens thi'ough taxation. The citizens bear the burden of loss in either case. The Company, not having the resource of public taxation, would face bankruptcy under the same conditions. In the case of port development, where the City is in competition with other cities for foreign and domestic shipping and where many factors in the problem are external to the city and not in its control, there may well be City aid in its development. The transit problem, however, is an internal proilem, of local interest only — a monopoly of local transportation wholly within the City's control, and containing within itself all the means needed for its solution. No financial aid need be extended by the City if the public insistence upon the 5-cent fare be temporarily abandoned. As shown elsewhere in this report, should the comprehensive system be built at a cost of say $60,000,000 and be in operation in 1921, as per Plan No. 16 of the 1915 Annual Report of the Department of City Transit, under the terms assumed, the resulting car fare is estimated to be about 5.59 cents, which is about 8 per cent, higher than the present fare of 5.166 cents, or 12 per cent, higher than the ideal 5-cent fare. If the "Progressive Step" program, herein outlined, be adopted, and Steps Nos. 1 and 2 be in use in 1921, under the same assumptions, the fare required has been estimated at 5.30 cents — about 3 per cent, increase above the present fare. All propositions heretofore submitted have been on the assumption that under the lease of these lines to the Philadelphia Rapid Transit Company the City would assume all excess fare over 5 cents up to the limit of full interest and sinldng fund on the bonds issued for the con- struction of the lines, thereby paying about 12 per cent, of the car fares of the riders in 1921. Should the City-built lines be leased on a basis of a 5-cent flat fare (as collected on the cars) with universal transfers, the annual loss resulting is estimated to be in 1921, for the com- plete system : 9 -^ cents X 555,000,000 passengers=$3,275,000, 100 or, on the program herein outlined : Of) -^ cents X 555,000,000 passengers=$l,665,000. 100 As these losses (which include the compensation to the Philadelphia Rapid Transit Com- pany for loss of revenue due to the abolishment of the 8-cent exchange tickets) must be borne by the City up to the limit of the full interest and sinking fund charges, all plans heretofore have proposed that the City shall meet them by a tax on real estate. It may be assiuned that this will require an increase in 1921 of say 12 per cent, for the complete system, or perhaps 5 per cent, for the smaller system. Why should this be done? Why should not the City insert in the lease of the lines a clause providing for fare adjust- ment to meet the total cost of service which may be outlined as follows : "Before the operation of any part of the complete system of rapid transit lines is begun the question of the proper fare to be charged in order to meet the cost of the ser- vice rendered shall be reviewed and its proper amount determined by the Public Service Commission of the State of Pennsylvania, and the Lessee and the Department of City Tran- sit shall work out the details. This fare, v/hen adjusted, shall be subject to reduction when cost of service warrants. ' ' The probable fare required can only be approximately estimated now, as it will be affected by the amount of construction authorized during the period of inflated prices. For example, under such a provision of tlie lease, for the year 1921 and thereafter until the cost of service warrants a readjustment in the City's tax, the fare, if the complete system be in operation as per Plan No. 16 of the 1915 Annual Report of this Department, will aver- age: 5.166^ (Lessee's present fare) + 0.425^ (City Tax)= 5.591^ per complete journey. or, if Steps Nos. 1 and 2 only of the complete plan he in use, the fare will average : 5.166<} (Lessee's present fare) + 0.134^ (City Tax) = 5.30^ per complete journey. The lessee's portion of the fare in this illustration has been taken at the present rate in order that the loss by abolishment of 8-cent exchanges to the Company may be fully met. Provision should be made in the lease for the corresponding increase in the City tax por- tion of the fare as more lines are added. It should be understood that the figures just given are for illustrating the principle only. The portion of the fare representing the City's tax is levied to meet the interest on bonds issued to pay for the new rapid transit lines. It should be collected by the lessee and turned into the City's treasury exactly as in the case of the lease of the City's gas works. This tax should produce the revenue needed to meet the City's obli- gations — 0.425^ X 555,000,000=$2,361,000 Interest and Sinking Fund on $53,082,000 Bonds. 0.134^ X 555,000,000= $744,000 Interest and Sinking Fund on $17,506,000 Bonds. 10 6LENSIDE SUBWAY AND ELEVATED LINES SUGGESTED <■ (Steps 1 and 2 shown In Red) gl for . _\. _'!^(2yZ^^K IN DEPENDENT (COMPETITIVE) SYSTEM and Plan of THROUGH-ROUTING FOR COMPREHENSIVE SYSTEM ELEVATED ^ ^ «• SUBWAY EXISTING TRACK — NEW TRACK EXISTING TRACK LEGEND Rapid Tranftit Lmea Surface F«e< _ _ Surfao« Feci 4^ ^ «- NEWTHACK • • • ProDOted 3Slh Ward High Speed Surra< I Rao.d Transit Lifia* MAP N0.1 Slinuld not this plan lie preferable to any herotnfore proposed, and meet all require- ments of tlie problem? Under it, as the result of adding- about oue-half cent to each car fare, commencing in 1921, (a) The citizens get any and all lines as and when they order them, the 8-cent ex- changes are abolished and the tax rate is unaffected by the transit problem, (b) The City gets its interest and sinking fund charges, (e) The present rate of fare of the lessee (the Philadelphia Rapid Transit Company) will not be disturbed. Hence all parties interested should be satisfied. It will not be attempted here to furnish details as to how this average fare can be secured practically. That must be left to be solved in connection with the lease of the lines. It should be arranged justly and equitably and it is entirely feasible. The principle must be settled now. Shall the real estate taxes be raised 12 per cent, in 1921, or the car fares raised one-half cent? The interest must be met then if the lines are built. The question involved is not a moral one of right or wrong — it is a question of expediency, of determining whether the citizens who enjoy the benefits of a service should pay the full cost of the service which must always include a proper return upon the value of the plants which supply it. The disposition to transfer charges for puljlie utilities is simply an indication of the public desire to escape from taxes wherever possible, and results from a fallacious idea that a trans- ferred tax is an averted tax. In order to make this report absolutely clear and prevent any misunderstanding of the figures and facts given herein, I desire to emphasize the following statement, which appears in substance in other places in this report : All the subway and elevated lines included in the ' ' Taylor Plan, ' ' with only such changes as I have suggested regarding the City Hall section and the loop, can be built and the two systems unified without any increase in the tax rate, if the people are willing to pay an aver- age fare estimated not to exceed 5-^ cents commencing in 1921, which will take care of the City's interest and sinking fund charges. This fare may be reduced gradually until it reaches 5 cents about 1960. Elsewhere in this report is explained the alternative — the effect on the tax rate if the fare be not raised. Independent Operator of City's Lines. As stated elsewhere, this and all previous i-eports made by the Department have assumed and recommended that the existing and the new systems be operated in combination. Should such a result finally be found to be impossible or inexpedient, for reasons financial or otherwise, an alteration of routing will be desirable as the lines will then be operated in com- petition with the existing system and not as a supplement to it. Map No. 1 shows the suggested arrangement for a competitive system. The map clearly shows that a system of this kind would work great damage to the existing system but that it could later be used to supplement that system. By the general law of economies the new lines, though originally leased to an independent operator, will probably at some time be unified with the existing system. 11 Burden Not Realised Now. A seductive feature of the present financial plans for the construction of the rapid transit lines is found in the proposal to issue City bonds under the provisions of the recent Act pro- viding for a life of 50 years, the payment of the interest and sinking fund charges during the period of construction, and one year thereafter, out of the proceeds of the bonds themselves, and a gradual sinking fund — all features expected and intended to place as much of the burden as possible on posterity. The seductive feature is in the fact that the burden will not be real- ized until possibly four years after the lines are authorized. Legal Questions Not Discussed. It is not my purpose in this report to try to pass on or discuss the legal phases of the au- thorization by City Councils of the lines covered in the Ordinance of July 2, 1915, and the loan bill approved June 30, 1915, or to discuss how they may be affected by tlie conditions and limita- tions named therein, or to argue the point as to whether such limitations were right and proper from other standpoints. I shall leave that to be determined by the proper authorities, who will take such action in regard to it as they deem best. This matter must be passed on by the Public Service Commission in any event. In this report I have made my recommendations along lines which I regard as sound and businesslike aud wdtli full regard to the responsibilities devolving on the taxpayers by reason of the cost of this undertakng. No section of the city has been intentionally favored at the expense of others. Naturally and properly each section aims to secure the best transit facilities obtainable to serve its people. In suggesting means to meet the transit needs of the entire city, I have been guided by the respective urgency of these needs and have formulated a schedule of construction for transit development which wiU event- ually serve all sections of the city and not to impose an unprofitable liability on the taxpayers or undue burden upon the car riders. (See note and City Solicitor's opinion — Appendix C.) Data Forming Basis of this Report. The technical data upon which this report is based are the same as those upon wliich pre- vious reports of this Department have been based. General Principles. As it is very desirable to make a munieipally-owned rapid transit system a commercially successful business proposition, or as nearly self-supporting as possible, in order to avoid the alternative of making up from general taxation the deficit in the City's bond interest and sink- ing fund, it becomes most essential to observe in the design of the system certain principles which may be fairly regarded as axiomatic. These principles may be briefly stated as follows : 1. Locate rapid transit lines in general along direct routes where the congestion has be- come too great for surface lines to run at fair speed and to properly take care of the trafSc ; the main object of rapid transit lines in a unified system is to supplement the surface car service by removing therefrom a large part of the passenger traffic and placing this traffic above or below the street level where, being free from interference with other traffic, much higher speed can be maintained and larger and heavier trains operated. 12 2. Construct each line in progressive steps, completing the most urgently needed section first and adding extensions or branches only as their necessity or feasibility is demonstrated. 3. Plan the system as a comprehensive whole conforming to the ideal plan as nearly as local conditions permit and with the underlying idea of operating all trains on the principle of through-routing as far as possible, as this is now universally conceded to be the proper method of operation. Avoid the so-called ' ' looping ' ' method of operation wherever possible. 4. Construct the minimum amount of subway line, as this is the most expensive form of construction and hence carries the highest interest charge per mile. As a corollary of this, sub- ways should be built only where no other form can be used or accepted on account of high property damages resulting from the use of any other form, or for esthetic reasons, or where some special or peculiar conformation of the streets makes a subway imperative. 5. Construct rapid transit lines to such points only in the outlying districts as will pro- vide sufficient traffic to load the lines to an economical amount. Beyond such points the traffic should be carried by either surface lines or by other cheaper forms of high-speed construction. 6. Locate rapid transit lines in the business district so they will act as channels through which the main traffic flow between the residential and business districts may be conveyed with- out confusion or congestion, and so as to require a minimum of transferring to reach the rider's destination. 7. Utilize existing surface car facilities to the fullest extent possible and supplement them by high-speed surface extensions into the suburbs, located on wide streets or private right-of- way so as to provide economically for the development of the territory adjacent or tributary to the rapid transit lines. In my judgment, some of the plans and recommendations offered in the 1915 Annual Re- port of this Department by my predecessor should be modified in accordance with the fore- going principles. While it would be much easier to accept such plans and recommendations as promulgated than to convince the public that it is desirable from their standpoint to make alterations in them, I believe it will be to the City's interest financially and to the general welfare of the passen- gers on tbese lines to make certain modifications which will tend to expedite construction, re- duce the cost of construction and operation, and also facilitate traffic movement to a greater degree than the plans formerly recommended. The general location of the main radial lines cannot be improved and such lines will serve the City's needs adequately for many years to come, but the arrangement of the loop or ter- minal tracks in the delivery or business district of the City I believe to be capable of improve- ment so as to permit a more economical use of the City's streets and a more efficient method of through-routing the rapid transit trains. Also, for financial reasons, I do not favor the construction program as outlined, — as a busi- ness project it should be broken into progressive steps to allow the City and the lessee intervals of time in which to digest and assimilate each addition to the system. The Financial Difficulties of the Problem of City-Owned Lines. Rapid transit problems have developed in all large cities as one of the penalties that they must pay for bigness or for over-size. Usually no such problem exists until the city reaches 500,000 population, or its residential section extends more than three miles from the business district. 2 13 The difficulty of financing rapid transit propositions is that they must be built originally with train and passenger capacity largely in excess of the existing needs. They do not increase the total volume of riding in a city to any great extent and the greater part of their traffic is taken from other lines from which they draw by virtue of providing better, quicker or more frequent service, or of providing satisfactory service at a lower fare. The Germantown district today is served by two direct lines of surface cars from the center of the city, and by two steam roads giving frequent service. The complaint from this district i.s that the surface cars are too slow and on the steam cars the service is too infrequent and the fare is too high. What is desired by these residents is the quick and comfortable service of the steam roads at the 5-cent fare limit together with the frequent service of the surface roads. This is equivalent to an improvement of service, and a fare reduction at the same time. The problem which the City is attempting to solve seems to have but two answers — either a higher unit fare than 5 cents per passenger, or the City must assist the operator of the lines by assuming at the start a large share of the interest charges on the rapid transit system. Why Does the City Engage in this Experiment? Because the proposed rapid transit lines are not attractive to private capital. A city is an assemblage of people organized for the purpose of securing the benefits — social and commercial — of combined sei-vice and effort. A city will continue to grow so long as the conditions of life therein are acceptable and inviting. Such growth calls for a larger land area for residential purposes each year, and such land is now located chiefly in the city's suburbs. New and suburban development causes a diversion of tenants, especially from the older and less desirable sections of the city, to those new sections where they can obtain for the same or less rent more desirable surroundings. The newer and suburban districts prosper at the expense of the older parts of the city lying between the first and fourth mile zones. Rapid transit lines do not directly affect the growth of a city, as this growth is from two sources : 1. By accretions from without, and 2. By increase of population from within. These lines shift population and traffic from one district to another more favorably situ- ated. The population of a city consists of people who are engaged in commercial or mercantile industries or manufacturing, either as employers or employees, and the transit facilities of a city are primarily not for pleasure purposes, but to convey the population between their homes and their work, or between their homes and trading points. As the main city grows constantly on the outer fringe it will be found that building de- velopment usually follows close upon the introduction of so-called city improvements (grading of streets, sewerage, water and gas supply, etc.). Surface transit facilities in the past, while such development was within the four-mile circle, have usually kept pace fairly well with the demands, but as the residential area is being pushed farther and farther from the city's center there is more reluctance on the part of the street car companies to follow the development. Further, as the distance traveled daily by riders increases, more need is felt for quicker transit than surface lines can provide. This has produced a demand which the present Company in Philadelphia is not able to assume the fin- ancial burden of supplying. This fact only has brought the City face to face with the prob- 14 lem which it is proposed to solve by the City lending its credit and assuming liability for in- terest on the cost of constructing such facilities. Kapid transit lines, while in general providing for the comfort and convenience of the traveling public, have also a commercial side. Such rapid transit lines as have been built in the past were originated as business ven- tures with the primary view of making money for their builders. In very few cases, however, have the expectations of the original builders or promoters been realized. Why Called an Experiment? This enterprise upon which the City has embarked has been called an experiment; it may be asked why is it considered an experiment? It is a test on a large or working scale of an untried combination of elements to ascertain the truth or practicability of the principles underlying the combination. In no other city, particularly one with the population and covering the area of Philadel- pliia, has it been attempted to combine and unify the operation of surface and rapid transit systems, giving free interchanges at all points of intersection, on a 5-cent fare, the routes and extensions being under the control of a eouncilmanic body, and it being tentatively assumed that all the burden of the construction of the system shall constitute the city's liability — no guarantee by company to protect city from loss. The transportation system in Boston resembles what is contemplated for Philadelphia more nearly than that of any other city. But in Boston the program has been so arranged that the facilities have been added gradually over a 20-year period, and the entire burden car- ried by the Boston Elevated Railway Company. Up to 1915 not one dollar of the City's money has been used to make up deficits in the City's interest due to lack of income. The New York leases under the "dual system" resemble what is here proposed, but in New York no attempt has been made to secure a unified system. In the New York territory are three high-speed systems and four surface systems operating independently. The results in Boston are not satisfactory to the lessee company, but appear to be to the City. In New York City the "dual system" will not be in use for some months at least, so it is too early to judge results. Main Issues. The real issue to be decided is not "Shall the Broad Street Line stop temporarily at Erie Avenue and at Spruce Street?" but the much larger issues, "Shall this undertaking be handled on a business or a political basis ; shall the City build according to its necessities or according to unwarranted sectional demands; shall Councils be guided by the advice of its Director of Transit (or a board of capable and locally disinterested men), or by the demands of aggressive and energetic citizens, actuated by local interests?" The City has reached tlie parting of the ways — it must make a decision now as to the under- lying principles and policies which are to govei-n. A STUDY OF THE RAPID TRANSIT PROBLEM IN PHILADELPHIA WITH SUGGESTIONS FOR ITS PROPER DEVELOPMENT SUmiARY OF REPORT. The purpose of this Report upon the Rapid Transit Problem in the City of Philadelphia is to call attention to certain features which I regard as unwise and inexpedient in the con- struction and financial programs for the vast undertaking upon which the City has taken the initial steps, and to present suggestions as to construction and the methods of financing the construction cost and deficits from operation in interest charges that should effect (a) economy in its construction, (b) a proper conservation of City funds and revenue, and (c) an improve- ment in the service of the system. The program upon which the City has entered is fully set forth in the report of this De- partment for the year 1915, which contemplates and recommends the inmiediate construction of a comprehensive system of rapid transit lines extending into several outlying districts of the city, involving on the City's part an initial investment of $56,000,000 or more of City funds for construction (in addition to private funds for equipment), and requiring annually an ad- ditional investment from City revenue to meet deficits in interest charges. This report is not to promulgate a new plan of routes or lines, and it clearly sets forth the fact that in the general routes and extent of the lines as laid down in all former reports between the suburbs and the business center of the city no change is suggested as they are not open to criticism. A change of lines and of location of stations within the business district is suggested for reasons fully given. It assumes that everyone will admit that this comprehensive system is intended to take care of the growth of Philadelphia for forty years to come — a metropolitan Philadelphia with 3,000,000 population. It assumes, as all previous reports have done, that whenever and whatever rapid transit lines are built, they will be operated by the Philadelphia Rapid Transit Company, the surface and rapid transit lines being operated as a imified system. It also clearly shows that the extent of the financial burden resulting from the construc- tion and operation of this system will depend directly on the answers to the following questions in which every citizen is financially interested, either directly or indirectly : (a) What lines shall be built? (b) How far shall they be built from the center of the city? (e) "When shall they be built? (d) Who shall pay for them? (e) Shall lines to develop suburban property be built with City's funds; or shall the property benefited share in the cdst? (f) Who shall operate them? 17 (g) Upon what terms shall they be leased? (h) How shall deficits in City's interest charges on bonds be met? (i) Shall the burden be put upon the City taxes on real estate and personal property, or upon the car rider ? (j) If deficits are to be met out of the City revenue, what effect will it have on the tax rate? (k) If deficits are to be met by an increase in fare to the car rider, shall it be a uniform increase, or shall the riders on the rapid transit lines only pay the increase? (1) Why should the City engage in this experiment in transportation? (m) Why is this called an experiment? All these questions are fully discussed in the body of the report with a view to explaining some points not clearly brought out in former reports and discussions of this experimental undertaking upon which the City has now embarked. It assumes what all previous reports have shown — that the operation of the unified system will not produce sufficient net income to meet the requirements of the operator and the City's interest and sinking fund, thereby creating a deficit in the City's account. It shows what causes these deficits, of what they are made up, and suggests methods of meeting them. It shows that the average fare per journey on the present system is in excess of five cents, and that five cents flat is inadequate to furnish the required net income. It lays down the general principles on which rapid transit lines should be designed, and also contains a general discussion of rapid trapsit in modern cities, showing what would constitute an ideal system of unified operation, and shows the true function of surface and rapid transit lines in unified and competitive operation. It discusses at length the proper distribution of the burden which will result to the City from the operation of this system, and suggests methods of financing which should serve to check unwarranted expansion of the system and which should reduce the operating deficits. Two appendices are added treating on the principle of assessing the cost of public im- provements upon the territory receiving the benefit of such improvements. The features of the City's present program which I regard as unwise and inexpedient consist of: 1. The undertaking of the whole construction program at once during an era of abnor- mally high prices and before the operator of the system has been determined upon, and before settlement upon the terms of a lease for the operation of the lines upon their completion. 2. The financing entirely by City funds, of the construction of branch lines in suburban or undeveloped districts where the traffic will for many years be inadequate to warrant such outlay. 3. The diversion from the City's treasury of revenue from the general tax funds for the payment of deficits in interest and sinldng fund charges on City bonds issued to pay for the construction of the system. 4. The location of certain lines and stations within the business district and the conse- quent method of routing trains. 18 The suggested improvements in the program are: 1. That the terms on which a comprehensive system of rapid transit lines can be leased to an operator be ascertained, and that no more construction than is now authorized be under- taken until it is definitely known by whom the entire system is to be operated and upon what terms. 2. Divide the comprehensive plan of routes into two parts (see Map No. 5) : (a) The sections forming the trunk lines, in and through the 25-minute street car zone from City Hall. These lines to be considered as terminals and trunk lines, and being for the general benefit of the city as a whole they should be financed on City bonds. (b) All extensions and branches of such lines into outlying or suburban territory are to be considered as for local benefit chiefly, and the cost of construction of such ex- tensions and branches should be borne by the property in the territory served by them. As legal authority for such method of financing these extensions is lacking, it is suggested in this report that proper laws be passed at the next Legislature to empower the City to make use of this method at its option. Extensions to the trunk system will not become necessities immediately, and as even the trunk sys- tem will not be ready for use under three years from date, ample time is available for obtaining such legislation. (See Opinion of City Solicitor — Appendix C.) 3. Construct at this time of 'abnormally high prices only such portion of the trunk lines as may be considered the necessary and terminal sections, viz. : Part of the Broad Street Subway and the Prankford Elevated — the subway to extend from Spruce Street to Erie Avenue or Pike Street with a line on Walnut Street from Sixteenth Street to Eighth Street, on Eightli Street to Race Street and, by the opening of Ridge Avenue between Eighth and Ninth Streets, on Ridge Avenue from Race Street to Broad Street, the line from Ridge Avenue to Pike Street to be 4-track and the remainder 2-track. The Frankford Elevated to terminate for the present at Bridge Street. All terminals to be considered temporary only, and sequence of construc- tion of the remainder of the trunk routes to be the subject of later determination as conditions warrant. It is suggested that there be two tracks only in Broad Street at Market Street, and that the City Hall Station be located just north of City Hall instead of under it, thereby bringing the platforms much nearer the surface of the street, and greatly lessening the cost of construction, and separating this station further from the Chestnut Street Station, and reducing congestion at City Hall. (See Maps Nos. 6 and 7.) 4. Construct at such later dates and to such extent and in such sequence as they may be properly authorized, the remainder of the comprehensive system of lines needed and now contem- plated. 5. Take steps to obtain the necessary legislation to empower the City to finance the con- struction of the extensions by means of bonds, the interest on which can be met by local assess- ment on the pi'operty in the districts served. (See Opinion of City Solicitor — Appendix C.) This report endeavors to make clear that the fundamental issues involved in this problem now before the people are not personal, but municipal. 19 These issues are: 1. Shall the City in return for the burden it assumes receive a fraction of the financial profits which will result from these lines ; or shall these benefits all flow toward the enrichment of a small number of suburban land o\Miers and operators in real estate? 2. Shall the City embark in a vast experiment in city transportation gradually and with fair business caution ; or shall it provide the facilities now for two generations ahead and assume the increased liabilities which result? 3. Shall the turden of deficits be placed on the property of the citizens in the shape of an increase of taxes? or, I 4. Shall this burden be placed in part at least on the ones benefited ; namely, on the car riders by an increase of fare ? These questions must be answered by every citizen for himself — upon him alone rests the responsibility for the results of the decision. 20 A HISTORY AND ANALYSIS OF THE PLANS FOR RAPID TRANSIT DEVELOPMENT IN PHILADELPHIA. 1913-1916 On May 27, 1912, the Hon. Rudolph Blankenburg, then Mayor of Philadelphia, appointed Mr. A. Merritt Taylor, a man of vision, constructive ability and experience in railroad operation and finance, as Transit Commissioner, "to investigate the problems of improved tran- sit facilities for Philadelphia, with a view of determining advisable means for obtaining rapid, efficient and cheap transit throughout the city and its suburbs by the use of subways or other approved modern methods, to consider fully the question of public and private ownership and the financial and economic aspects of the problem, • * * to recommend ways and means whereby efficient and rapid transit commensurate with the present and future needs of the entire city and its suburbs may be secured within a reasonable number of years." The report which resulted from this appointment was issued in July, 1913, and constituted the original "Taylor Plan" of rapid transit development for Philadelphia and vicinity. On July 1, 1913, Mr. Taylor was appointed Director of the Department of City Transit. This Department was organized in compliance with the Act of Legislature, approved May 9, 1913. The Act creating this Department provides that "The Director shall from time to time make such recommendations to the Councils of said cities, as to him shall seem proper, for the improvement and development of the facilities for transportation of persons and property within said cities." In accordance with this mandate, several reports were issued by the Department of City Transit during the period ending December, 1915. Outline of the Case. The latest plans for tran.sit development in Philadelphia, popularly known as the ' ' Taylor Plans," comprise the following salient elements: (a) A proposal that the City shall supply all funds for construction of a comprehensive system of rapid transit lines to supplement the present system. (b) A recognition of the fact that City Councils shall determine when and where such lines shall be built and how financed. (e) A proposal that the City-built lines shall be leased to the Philadelphia Rapid Transit Company, for operation in connection with the present system, with free transfers. (d) A proposal to lease the City-built lines to an independent operator if a satisfactory lease with the Philadelphia Rapid Transit Company cannot be secured. (e) A proposal that the lessee shall supply all funds needed for the equipment of the City-built lines and for all extensions of the surface system. (f) A proposal that the fare per journey as paid on the cars shall be 5 cents only. (g) A proposal that the City shall transfer all excess of cost of service over the revenue derived from a 5-cent fare to the real estate taxes of the City, up to the full cash requirements of its bond interest and sinking fund. (h) The assumption that the Philadelphia Rapid Transit Company will be the operator of the entire system. 21 (i) A modification of the "Contract of 1907" between the City and the Philadelphia Rapid Transit Company, with an extension of scope. Elements (b), (f) and (g) contain the dangerous features of the program — (b) because it recognizes a political control of what is a highly complex business problem in transportation, and (f) and (g) because they are fallacious in principle and socialistic in theory. Former Taylor Plans Analyzed. In speaking of the "Taylor Plan" there seems to be a general impression in the minds of the public that it is something fixed and unalterable ; a perfect conception, and therefore not sub- ject to improvement. In order to show that the "Taylor Plan" of December, 1915, differs very considerably from the plan promulgated in the Transit Commissioner's Report of 1913, I sub- mit the following comparative statement showing the changes that were made in the plan year after year. Elsewhere in this report will be found explanations of some of the changes, and this introduction is for the purpose of making clear that it is a review of the different "Taylor Plans" indicating some of the defects which have become evident with later study, and making suggestions for further improvement. This report may be regarded as a fourth edition of those plans. (See Statement 1.) If the comparative statement of the original and the final "Taylor Plans" be analyzed it will be found that running through them are certain fundamental elements (see Statement 3) : 1. The comprehensive program of construction of lines radiating from the center of the city into the outlying districts. 2. A financial plan using the City's credit to a greater or less extent for the purpose of financing different portions of the system. 3. A unified system of operation in connection with the existing system, the assumed basis being in all cases a lease of the City-built lines and a uniform fare over the entire city. 4. The elimination of the 8-cent exchanges and the substitution for them of free transfers. This was not mentioned in the original ' ' Taylor Plan ' ' and has been developed during the nego- tiations made in the attempt to secure unified operation under a modification of the 1907 Con- tract. In each of the plans the equipment of the City-built lines is assumed to be furnished by the lessee of the lines. Taylor Plans — Comparison of Previous Recommendations. A comparison of the recommendations of the Report of 1913 with the Report of 1915 shows that the City's credit, which at first was to be used to the extent of about $35,000,000 for the construction of the Broad Street Line with branches and Delivery Loop only, has expanded to over $60,000,000, now covering the entire construction of a more comprehensive system than was contemplated in 1913, as the 1915 plans include the 29th Street— Roxborough Line and the high-speed surface line in the 35th Ward, which were not a part of the original recommenda- tions. 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Results shown in Column 3 assume Camden Tube as not built. This table shows that, owing to the operation of the provision recommended in the tentative form of lease as to cmnulative deficits being repaid out of surplus earnings of system, there will be no surplus to the Company until near the expiration of the 50-year lease— under all plans except those herein recom- mended, and any deficit carried over would probably be lost. (A) The figures shown in this column refer to Plan No. 16 of the 1915 Annual Report and do not include line to Byberry or Germanto^vn Branch of Broad Street Subway. (B) The figures in this column refer to Plan No. 8 of 1915 Annual Report and do not include the German- town Branch. 28 These extensive changes in the construction and financial plans would not be so alarming were it not for the fact that the assumed basis upon which these lines can be leased throws a much greater burden upon the City than was contemplated in the Report of 1913, upon which the City originally decided to act. The Report of 1913 shows an estimated average rate of return on the entire investment in rapid transit lines of 4.1 per cent., but these figures were based upon the assumptions (a) that the exchange tickets would not be disturbed, (b) that transfers to the rapid transit lines would not be given within the three-mile limit, (c) that the present system would not be re- imbursed for losses due to the competition of the rapid transit lines, and (d) that joint revenue would be divided on a passenger mileage basis. The forms of lease recommended in 1914 and in 1915 differ radically on all these points, the last recommendations assuming that the exchange tickets will be wiped out and the Com- pany compensated by the remittance of taxes sufficient to partially offset the loss. Transfers are to be granted universally between surface lines, between rapid transit lines, and between surface and rapid transit lines, and the Company's loss through competition of the rapid tran- sit lines is to be made up and restored to them to a limited amount from the net earnings of the rapid transit system before any payment may be made to the City for interest and sinking fund charges. As a result of these conditions large annual deficits are estimated to accrue in the City's interest and sinking fund account. For the City to shoulder these annual deficits, caused by a deficient net income from the unified system, means a considerable increase in the tax rate. If the Company shoulders the deficits, as was substantially the case in Boston, it means either an increase in the fare or the alternative of bankruptcy. Elsewhere in this report it is shown that even were all excess of capital (commonly called "water") eliminated from the present system, the complete unified system could not be profitable on the universal 5-cent fare. The experience of Boston seems to prove this statement conclusively. Taylor Plans — Comparative Merits of the Former Plans. An opinion may be given here as to the comparative merits of the original and final rec- ommendations from the City's standpoint. Referring first to the original recommendations (Transit Commissioner's Report of 1913) it may be stated that the general location of the routes recommended cannot be improved. The location and routing of lines in the business district is not perfect, but this is not a vital detail. The plan of financing is satisfactory, but the form of lease assumed is highly improb- able, thereby making the estimated operating results untrustworthy as regards the City's li- ability, and the financial results from such a lease, while possibly proper from a promoter's point of view and so compiled as to put the undertaking in the best light, do not show the actu- ally resulting loss of revenue from the City's treasuiy. An examination of the 1915 recommendations shows the result which may always be ex- pected where a private gain results from an expenditure of the people's money. Lines have been added to satisfy the demands of property owners and others interested in suburban dis- tricts, that the City shall assist to develop their property, and the City's credit has been utilized and its liability increased from $35,000,000 to over $60,000,000. The form of lease assumed is much more practicable, but under the vast expansion recom- mended and the alterations in the form of the lease, the deficit to which the City becomes liable has grown enormously. 3 29 A study of these two plans is very instructive since it shows that without some form of check by which the burdens which the City assumes in such an improvement can be at least partially transferred to the parties benefited, there is no limit to the pressure which will be put upon this Department and City Councils for the development of what are now suburban districts of the city. This is an exceedingly serious phase, and that it is not imaginary will be seen by a comparison of the changes in recommendations within the short period of two years. (See Statements 1, 2, and 3.) The routes for rapid transit lines and financial plans outlined in the original report, with the exceptions above noted, can be fully endorsed. The technical data upon which those recommendations were made are full, accurate and reliable, and these same data when applied to the recommendations of the 1915 report show that extensions into suburban territory beyond what was originally recommended cannot be justified on economic grounds. The Taylor Plan — Its Ideals. This report must be considered as a fourth edition of the "Taylor Plan," for while not written by Mr. Taylor, it is written by an engineer upon whom his mantle has fallen; by one who is in full sympathy with liim and who has the same ideals in view. It contains the same spirit of service and differs from former editions only in the methods as to how the ideals shall be attained. Underlying this and the former reports submitted by my predecessor upon transit devel- opment in Philadelphia is an ideal — A Unified Surface and Rapid Transit System of City Transportation on a Five-cent Fare Basis, popularly expressed in the slogan: "One City; One System ; One Fare ; " a slogan expressing a prophecy and a hope ; a sentiment with a main- spring of service. It is an ideal difficult of attainment containing both sentimental and commercial elements. Its realization will not be attained unless the difficulties are understood and overcome. The difficulties in the way of the unified city result from sectionalism. This is a psycho- logical element in the ideal which will not be discussed in this report. The difficulties lying in the way of a unified transportation system are not legal, but financial ; the Contract of 1907 encourages and provides for unified operation. The difficulties of operating the ideal system profitably on a 5-cent fare seem at present to be insurmountable. "When it is realized that the present system can barely exist on the fare which during 1915 averaged 5.166 cents per revenue passenger it is difficult to see how the same system can carry a large additional investment when that investment produces no notice- able increase of traffic or net profits. (See Diagram No. 6.) The Taylor Plan— General Defects. The recommendations made in the former reports are now realized to be defective along the following lines: 1. The first defect is that they do not contain any elements or features which would tend to regulate or control the demand that City funds be expended for sectional or private advantage. Without some form of control there will be no limit to the demands for these facilities. The experience of Boston extending over a period of twenty years, the exper- ience of New York over a period of more than ten years, and the sectional attitude already shown here in the last two years, prove that without some form of control by which the bur- 30 den resulting from unwarranted expansion is placed partially upon the shoulders of those bene- fited, the ideal aimed at can never be attained. 2. The second defect is the assumption tliat the civic and social benefits resulting from the establishment of these lines on a 5-cent fare will warrant the resulting burden being trans- ferred to the general real esta.te taxes of the City. This feature is discussed at length elsewhere in this report. 3. The third defect is in the assumption without question that it is better to carry the burden by a resulting property tax than by a personal tax in the shape of an adjustment of the car fare to meet the burden. Concerning these points this report is intended to be merely suggestive and advisory. There would seem to be fair grounds that the burden might be equitably divided, that the car fare might be adjusted so as to carry a portion of the burden, the balance being placed upon the general real estate of the city or carried by district assessment. The fact that an ideal is difficult to attain is no reason why that ideal should be aban- doned. I am heartily in favor of the ideal, and this report is aimed to make such suggestions as I believe will permit the attainment of as close an approximation to it as is now practi- cable. The Taylor Plan — Suggestions for Attaining the Ideal. While this report contains a number of suggestions, which may or may not be regarded as desirable or expedient in order to obtain the improved rapid transit facilities, which are so much desired by all citizens of Philadelphia, it makes but one real recommendation, which is : That All Citizens Should (a) Drop personal prejudice in connection with the problem. (b) Not allow any sentimental elements to obscure the practical elements of the problem. (c) Show a spirit to consider the proposition fairly and to cheerfully assume burdens in proportion to benefits. Loan Bill and Ordinances Under Which Construction was Authorized. The Contract of 1907 between the City and the Philadelphia Rapid Transit Comjiany con- tained the provision: "In case at any time in the future Councils shall, either of its own initiative or upon petition of any of the citizens, determine that new lines of surface, elevated or under- ground railway should be constructed within the city, it shall, by ordinance, determine the route of such line, and the terms and conditions under which it shall be built, financed and operated * * * " During 1915 a loan was authorized by the people for $6,000,000 toward the construction of the Prankford Elevated Railway from Front and Arch Streets to Rhawn Street, and the Broad Street Subway from League Island to Olney Avenue, with the necessary branch lines northeast and northwest from Broad Street. 31 Councils passed an Ordinance, approved July 2, 1915, defining the route and extent of these two lines, and making an appropriation of $6,000,000 toward their construction. The or- dinance however does not specify, as the Contract required, who shall operate these lines and upon what terms. In both lines the routes specified are considerably at variance with the recommendations of the former Director. In both cases the routes were extended far beyond the limits economically warranted, thus emphasizing the absolute necessity of some control over the demand that City funds be expended beyond economic limits for sectional or private advantage. , The legal terms and limitations embodied in these bills may conflict with the economic re- I quirements, but this report does not intend to pass on this point, which is referred to the Law Department for interpretation. Present Situation Complicated by Past Mistakes. The present situation in the transportation problem is complicated as the result of many errors and mistakes made by legislators in the past. Probably the fundamental mistake was in granting to the original passenger railways perpetual franchises for the use of the City's streets with a very indefinite provision for recapture of the privileges. Another mistake was in the City's '. requirement of an excessive franchise tax for the electrical equipment of the lines. A funda- mental mistake was in not recognizing the fact that city transportation is essentially a monop- oly and not suitable for a competitive business. Besides these mistakes on the City's side, which are more or less evident in the situation to- , day, bad judgment in financing and in the terms of consolidation of the various lines have pro- | duced a burden on the existing system wliich it is difficult to eliminate or overcome. The City's Financial Standing — Improvement which will Result if the Burden be Placed Upon the Car Riders. The legislation permitting the City to increase its bonded indebtedness from 7 per cent, to 10 per cent, of the assessed valuation of real and personal property for the purpose of de- veloping its port and rapid transit facilities was only granted upon the assumption that these facilities would be in part at least self-supporting and not result in a large increase in the annual tax rate. It was supposed that although the City would be the legal owner of any structures built from the proceeds of these loans, they would be leased or operated so as to produce sufficient income to make the project self-supporting and not be an additional burden upon the tax revenue. This is clearly stated in the law : "In ascertaining the borrowing capacity of said City of Philadelphia at any time there shall be excluded from the calculation a credit, where the work resulting from any previous expenditure for any one or more of the specific purposes herein above enumerated shall be | yielding to said City an annual current net revenue, the amount of which credit shall be I ascertained by capitalizing the annual net revenue during the year immediately preceding the time of such ascertainment. Such capitalization shall be accomplished by ascertaining " the principal amount which would yield such annual current net revenue at the average i rate of interest and sinking fund charges, payable upon the indebtedness incurred by said ' City for such purposes up to the time of such ascertainment. The method of determining such amount so to be excluded or allowed as a credit may be prescribed by the General As- J sembly." • 32 If the contract under wliich these City-built lines are to be operated shall make provision for a proper fare adjustment so that the enterprise will be self-supporting and not a burden on the taxpayers this eniire special borroiving capacity amounting to about $69,000,000 at the present time will he free as far as any transit demands are concerned. This fact should not be lightly overlooked as it greatly increases the strength of the City's financial position. These rapid transit lines are not attractive to the present Company simply because the nominal 5-cent fare will not produce sufficient revenue to permit them to be financed. If the fare be adjusted the City's credit need not be utilized at all, and the Frankford Elevated, which logically should be a part of the Philadelphia Rapid Transit Company System and not the City System, may be sold by the City to them at cost and the City money used for subways only. In the original "Taylor Plan" as shown elsewhere, such ownership was con- templated. Financing of the Project. Under all plans which have been presented to date the funds to pay for construction of the entire system, except equipment, have been assumed to be provided by the sale of City bonds, and legislation has been secured permitting the City to increase its indebtedness three per cent, and to issue fifty-year bonds in place of thirty-year bonds to furnish funds for the project. The former Director of this Department requested that a loan of $50,000,000 be authorized and appropriated for the construction of a comprehensive system, outlined in the 1915 Annual Report of this Department, a summary of which is given elsewhere in this report. The recommendation to build all these lines now or presently I cannot endorse for the fol- lowing reasons: 1. I regard the program as being more comprehensive than is needed to meet the present demands of the city and suggest that the program of construction be broken into steps, build- ing the trunk or terminal sections and the most urgently needed portions of the lines only, dur- ing this time of inflated prices. 2. I suggest that parts of the system for later construction, described elsewhere in this report, be so financed as to place a portion at least of the resulting burden on the districts benefited — either by special property tax or by personal tax (adjustment of car fares). (See Map No. 5.) There is no objection to the loan of $50,000,000 being authorized, but $35,000,000 only is advised herein, this being a matter entirely in the hands of Councils and the citizens. 33 I THE PRESENT PLANS FOR RAPID TRANSIT DEVELOPMENT Definition of the Taylor Plans. It is unfortunate that there exists in the minds of the public a somewhat hazy conception of just what the "Taylor Plans" comprehend, and an assumption that they are al)Solutely per- fect, and if altered in any way it will be to tlie disadvantage of the City. As stated elsewhere, the original and the final plans differ radically at many points. The final and official "Taylor Plans," as they appear in the Annual Report of the De- partment of City Transit for 1915, are as follows: "1. A special election should be authorized and held at the earliest date practica- ble for the purpose of authorizing an increase in the City's indebtedness in the amount . of .$50,000,000 for transit development, and in the broadest terms. "2. Following the special election, appropriations should be promptly made for the completion of the Broad Street Subway, including the Delivery Loop and elevated branches, the completion of the Frankford Elevated, and if a satisfactory arrangement be not com- pleted with the existing system for the operation of the City-built lines, then for the con- struction of the Chestnut Street Subway to connect the Frankford Elevated Line with the Woodland Avenue Elevated Line through the business district; "3. The "Woodland Avenue (Darby) Elevated Line should be constructed promptly, connecting with the Market Street Subway-Elevated Line near Thirtieth Street, and should be operated in connection with the Market Street Subway-Elevated Line so long as the capacity of the latter will permit. "4. Upon the completion of a satisfactoiy arrangement with the Philadelphia Rapid Transit Company, the Northwest Subway-Elevated Line in the Parkway, Twenty-ninth Street, Henry Avenue and Ridge Avenue should be undertaken. "5. A slight change should be made in the alignment of the Broad Street Subway as before recommended, resulting in a material saving in cost of construction, and at the same time leaving adequate space for additional subway between Filbert Street and Ridge Avenue for occupation in the future by the Pennsylvania Railroad Company, or such other line as may be built. "6. Every effort should be made to conclude a satisfactory agreement withthe Phila- delphia Rapid Transit Company before any expenditures are actually made on the Chest- nut Street Subway, which will be essential to connect up the two aforesaid elevated lines for independent operation. "Prompt action is necessary, however, as the Frankford Elevated will soon be com- pleted and must not be permitted to stand idle. It must, therefoi-e, be furnished with ter- minal facilities via Market Street or Chestnut Street. "The Department has carefully worked up the practical details to be embodied in the proposed agreement between the City and the Company in a manner whereby the interests of the City will be properly protected from a practical standpoint. "The legal points involved should be given careful consideration by the City Solici- tor, and the document should be carefully gone over from a legal standpoint. 35 "7. The City should secure as quickly as possible all the real estate and real estate easements necessary for the lines recommended, including the Chestnut Street Subway. The Chestnut Street Subway will be needed within ten years in order to relieve Market Street, whatever the method of operation of the City-built lines. It is of particular importance that such real estate or easements be secured in cases where buildings are likely to be erected or alterations made which might otherwise add to the cost to the City. All loan authorizations for transit development should be in such terms that the necessary real es- tate rights can be obtained thereunder to the best advantage. "8. The construction of a high-speed line serving the Thirty-fifth "Ward and con- necting with the Frankford Elevated should be undertaken at an early date, and proper arrangements should be made for the equipment and operation thereof. "9. The bill prepared by the Department providing that cars should be through- routed between lines built and owned by cities of the first class and lines built and owned by corporations within cities of the first class, should be introduced in the Legislature at the next session. "The enactment of this bill is most important." An analysis of these and former recommendations shows that the "Taylor Plans" really consist of four elements: 1. A comprehensive program of construction calling for the expenditure within the next three years of a sum estimated now to be in excess of $63,500,000 for the construction of the so-called Delivery Loop and lines radiating from the center of the city into five outlying dis- tricts of the city. 2. A financial plan — using the City's credit upon which to borrow funds for construc- tion and drawing upon the City's general and tax revenues for payment of annual deficits in interest and .sinking fund requirements. 3. The preparation and execution of a lease of this system to an operating company, which it is expected will be the Philadelphia Rapid Transit Company. The lines recommended are designed with that end in view, with the idea of opei-ating the surface lines and the City- built lines as a merged system, and providing for a free interchange between the systems at all points of intersection. 4. A modification of the "1907 Contract" with a view of eliminating the 8-cent exchange tickets, which have been in use since 1895, and the substitution therefor of practically a uni- versal system of free transfers on a S-cent fare. This last element may be considered to be somewhat dependent on, or a factor in, the third element and is fully discussed in the 1915 Report of this Department. It is unfortunate that in the minds of many people this last element, the question of trans- fers, exchanges and fare revision, is the cardinal feature of the "Taylor Plans." The pur- pose of this report is to suggest what are logical improvements in certain features of the first and second elements, namely the construction and financial programs, but not to discuss the third and fourth elements excepting insofar as they may be involved in the modification of the construction and financial programs. 36 Construction Program of Taylor Plan. An examination of the past reports of this Department will confirm the statement that the final recommendation is an evolution from the original recommendation wliich covered only : (a) The building by the Philadelphia Rapid Transit Company of the Frankford Elevated Line from Front and Arch Streets to Bridge Street in Frankford. (b) The building by the Philadelpliia Rapid Transit Company of an elevated line to Darby, connecting with the present Market Street Elevated Line at Thirtieth and Market Streets. (c) The building by the City of the Broad Street Line from League Island to Pike Street, with two elevated brandies and the Delivery Loop. The estimated investment of the City in this system was about $35,000,000. In the original report the Parkway Line was not considered, or recommended. Owing, however, to the insistent demands of the residents in the northwestern portion of tlie city, the Northwestern Line via the Parkway and Twenty-ninth Street was added, and a branch from the North Broad Street Subway was projected into Germantown, and by the direction of Coun- cils (the probable result of local demands) the extension from Bridge Street to Rhawn Street of the Frankford Elevated was included. A high-speed surface line on private right-of-way from Bridge Street to Byberry was finally added, and changes were made in the subway por- tion of Broad Street above Pike Street, bringing the total estimated cost — using the former estimates — to about $62,000,000 for the entire system. Two lines only have been authorized by City Councils to date and toward their construction $6,000,000 has been appropriated, leaving $56,000,000 as the estimated cost of the remainder of the work, based upon prices ruling at the time the estimates were made. On account of the favorable prices obtained on the contracts let during 1915, which aver- aged from fifteen to twenty per cent, below the estimated cost, the Department felt safe in assuming that, if the contracts were let promptly during the period of low prices, the sum of $50,000,000 would probably complete the entire program, and this amount was accordingly re- quested for the construction program. It is very unfortunate for the City that the low prices heretofore prevailing are no longer available — a sharp rise in all building material and labor having taken place in the last few months. Prices are now twenty to fifty per cent, above those existing a year ago, and as a busi- ness proposition, ignoring the political and sentimental aspects of the program, I think the City would be exceedingly unwise to construct as one unit or step at this time such a compre- liensive construction program, which cannot be justified for traffic or business reasons, and which will have capacity years in advance of tlie needs of the city. In a program of this magnitude, running over a construction period of at least three years, a contractor is bound to protect himself, and owing to the European war no one can safely pre- dict the course of prices tliree years in advance. This is only one of the many reasons for advocating tliat the final progi-am, which is in- tended to take care of Philadelphia's transportation needs for a period of thirty to fifty years, should be broken into steps. Objections to the Construction Program of the Taylor Plan. My objections to the construction program are : 1. It is a much too comprehensive system of construction for the City to attempt to digest in such a limited period as three years. It was born of an optimism concerning the growth of 37 Philadelphia which is not warranted by the existing conditions or statistics. It is intended to take care of the rapid transit needs of the City of Philadelphia when the population reaches 3,000,000. It is not a good business venture to construct such lines so far in advance of their need, as no man can safely predict the direction of growth in the city in the next two or three generations. I believe in designing the system with a proper amount of foresight, and in mak- ing provision for the future in a manner which seems to be in accordance with the probable needs as measured by the city's characteristics of growth and past history. I earnestly wish to see Philadelphia profit by the errors and mistakes made by other cities, and not spend money recklessly and without regard to the carrying charges, simply because the City has sufficient borrowing capacit.y available. 2. I do not advocate the City going into or committing itself to an extensive construction program in advance of the question of operation of the lines being definitely settled; in other words, until it is definitely known whether these lines will be operated by the Phila- delphia Rapid Transit Company or by an independent operator. This question is a vital one, and the commercial success of the system depends largely on the method of operation and the terms of the lease. The discussion of this matter elsewhere should make clear my conten- tion that this question of the lease should l)e definitely settled before the City commits itself to a program affecting its welfare for generations to come. 3. To carry out this construction program at the present time, in this era of high prices, will doubtless nearly — if not entirely — exhaust the City's credit. It may be a good political move to do this, but in my judgment it is not good business, and my observation has been that any political position not founded on a sound basis is an error in the long run. Political theories are often wrecked by economic facts. The citizens as a whole should realize that any warranted improvement benefiting one part of the city reacts beneficially on the entire city. This report should make it plain that the City contemplates the gradual building of a com- prehensive system which will fully serve the needs of the entire city. The Proposed Operating Lease of City-Built Lines. Regarding the second element of the "Taylor Plans," namely the operating lease, I may state that the vital importance of securing an operator of the City-built lines on terms satisfac- tory to the City, was early recognized and a suggested form of lease, following the general lines used with the "dual subway" contracts in New York City, was submitted by the Director of this Department to the conti'olling officials of the Philadelphia Rapid Transit Company. Nearly two years have elapsed since these officials signified their willingness to make such a lease, but inasmuch as the tentative draft contained provisions for protecting the Company against part of the losses through biTsiness diverted to the City's system, the Department felt that it should have a reciprocal protection and insisted that the Union Traction Company, the principal underlying subsidiary of the Philadelphia Rapid Transit Company, should become jointly responsible with the Philadelphia Rapid Transit Company, or in other words, the en- dorser of the lease. Up to the present time the Union Traction Company has not signified its intention to participate in the negotiations. The Department believes, in view of the financial history of the Philadelphia Rapid Tran- sit Company, that the City's position in this matter is entirely reasonable and proper — simply business precaution. ^ Any form of operating lease which acts so as to protect the Philadelphia Rapid Transit 38 Company also adds additional security to the subsidiary company and consequently increases the stability of the subsidiary. It has been assumed in all the recommendations and discussions made by this Department to date, that eventually an agreement will be reached with the Philadelphia Rapid Transit Company by which they will become the operator of the City built lines and that the present surface and subway-elevated system would be operated jointly with the City-built lines. For reasons given elsewhere in this report I strongly urge that no large amount of con- struction work — at least no work beyond the first and second steps described elsewhere in this report— be done pending the execution of a lease. It is vitally important that the question should be settled as to who is to operate this system, and upon what terms, and what routes are to be involved, in order to determine the financial results to both the City and the lessee. This report suggests that certain lines enumerated on Statement 2 of this report forming the central or terminal and trunk portions of the comprehensive system be constructed in steps as needed and financed out of funds provided from the sale of City bonds. All extensions into outlying and suburban territory connecting with this central system are suggested for construction when, if, and a.s ordered by Councils, after the enactment of new legislation enabling the City to assess the cost of these local branches upon the property of the district benefited. A full discussion of this appears elsewhere in this report ; also full dis- cussion is given in regard to the deficits which will result from the operation of this system, under different methods of operation and how they are to be met. The Contract between the City and the Philadelphia Rapid Transit Company, popularly known as the "1907 Contract," contains a third clause, reading as follows: "In case at any time in the future Councils shall, either of its own initiative or upon petition of any of the citizens, determine that new lines of surface, elevated or underground railway should be constructed within the City, it shall, by ordinance, determine the route of such line, and the terms and conditions under which it shall be built, financed and op- erated and the Company shall have ninety (90) days after the passage of such ordinance to take such corporate action as may be necessary to accept the same, certified copies of which action shall be duly filed with the Mayor within said period of ninety (90) days; but if the Company shall fail to accept said plan within said period of ninety (90) days, or shall reject the same within said time or, after accepting the same, shall fail to enter upon the work in good faith and prosecute the same as required in such ordinance, then the City may offer the right to construct and operate said road under said terms and conditions to such other persons, company or corporation as may be willing to undertake the same : Provided, However, That an.y rights acquired by the Company under this section, and the section immediately preceding, shall be subject to all the terms and conditions of this contract with respect to a voice in the management, supervision of accounts, division of profits after the return of six (6) per cent, upon the capital invested, and the right to ultimately acquire all the interest of the Company at the expiration of fifty (50) years from the date of this eon- tract: And, Provided Further, That in the ease of the construction of new lines the cap- ital necessary therefor shall, as far as practicable, be raised upon bond issues bearing the guarantee of the Compan.y as to principal and interest, which bonds shall be issued in denominations of one hundred (100) dollars, five hundred (500) dollars, and one thousand (1,000) dollars, and be offered to public subscription, but in no case shall they be sold tor less than par; and to siyh extent as it may be impracticable to finance new enterprises upon bonds, or in ease additional capital is needed for the purpose of extensions, additions and 39 betterments to existing lines, power or equipment, the same may be raised by an increase in the capital stock of the Company, but only with the express consent of the City, and all such increases shall be fi^ll paid at par in cash, and be subject to all the provisions herein contained with respect to the original thirty million (30,000,000) dollars of capital stock of the Company." On July 2, 1915, an ordinance passed by Councils was approved by the Mayor, authorizing the construction of the Frankford and Broad Street rapid transit lines, and $6,000,000 has been appropriated toward their construction. This clause distinctly states that Councils shall "by Ordinance determine the route of said such line and the terms and conditions under which it shall be built, financed and operated." The above ordinance determines the route, and partially sets forth the terms and conditions under which it shall be financed, but is absolutely silent as to the operation of the road. Up to date the Rapid Transit Company has shown no desire to operate these lines as is evidenced by the fact that they have not notified the City of their desire to submit a proposition for the operation of these lines. The City is therefore legally free to negotiate with other parties as to terms for the operation of these two routes. The wording of the "1907 Contract" apparently contemplates separate and independent contracts for each of the lines authorized. The contract evidently did not contemplate an ex- tensive and compi-ehonsive system as contemplated and recommended in the complete "Taylor Plans." The Contract clearly recognized that the building, financing and operating were inter- dependent and so linked together that one element cannot be disregarded without nullifying the intent of the Contract. This emphasizes again the absolute need of settling the question of who is to operate these lines before the construction is undertaken — to determine in advance whether this is to be a part of the unified system or supplementary to the existing system, or to operate independently as a direct competitor of the existing system. If this be not determined in advance of construction, the City may be placed in the position of hanging on a completed subway a sign frequently seen, "This building for rent — will be altered as required to suit tenant." That this is not a groundless fear is sho^^•n by the fact that New York City, after the completion of the first subway, now 12 years ago, designed a comprehensive system of subways knowTi as Tri-Borough Route, and started on its consti'uction hastily and without any knowl- edge or certainty by whom the system would be operated. Parts of this system, representing many millions of dollars, were completed and lay idle for several years; upon the final ex- ecution of the lease the system was divided between two operating companies and some work which had been done on abandoned routes was lost. Owing to the confusion which resulted from the delay in changing routes the City has lost a large amount of money and interest charges on completed sections of the route which had been standing idle and unused for many months. It is largely to avoid such errors and to save the City from financial loss that I urge and insist that the question of operation be settled in advance of any large amount of con- struction and the form of lease determined so that the system, when built, will be in accordance with the lease and conform as nearly as possible to the compromised wishes of the City and the operator. The preparation and negotiation of a lease of this character for a long period, involving not only the liability for large sums upon the City's side, but the welfare of a large transpor- tation company as well, involves a serious responsibility and will require the best legal and technical talent available, as will appear from a study of what possibilities are involved in this, the most vital feature of the entire undertaking. In the determination of what is just and equitable there is much room for honest differ- ence of opinion and the City must be very careful to avoid making an unwise contract, as 40 many now claim was done when the "Contract of 1907" was executed between the City and the Philadelphia Rapid Transit Company. Owing to the urgency of the situation the City should promptly arrange for the renewal of negotiations with the Philadelphia Rapid Transit Company, and secure from them a definite expression as to their willingness and ability to presently agree upon and execute a satisfactory lease; otherwise the City must look for an independent operator. It will be necessary to modify some features of the contemplated program if the lines are to be leased to an operator independent of the Philadelphia Rapid Transit Company. (See Map No. 1.) Should negotiations for a lease with the Philadelphia Rapid Transit Company fail, the City should at once formulate terms under which it is willing to lease to an independent' opera- tor and advertise these conditions so that bids can be secured. The proposals up to date have been presented by the City to the Philadelphia Rapid Tran- sit Company. The Philadelphia Rapid Transit Company has made but one counter-proposal, dated March 25, 1914, and later all negotiations were broken off by the Company. An earnest effort to cooperate must be made by the Philadelphia Rapid Transit Company and by the Union Traction Company, its subsidiary, if this lease is to become a fact. In the New York situation the first contract, involving about $39,000,000 for construction, carried with it a fifty year operating lease of the system. It is not likely that the City of Philadelphia could carry out its program on such lines, as conditions here are radically dift'erent from those which existed in New York sixteen years ago. Transfers Between Lines. As stated in the discussion of the financial results from the system, it has been assumed in making up those figures that the lease just mentioned will provide that the present and the new City-built systems be operated as a unified system and that practically universal free trans- fers will be available on a 5-cent fare basis. In this respect this report does not differ from all that have preceded it. It is strictly necessary in making comparative estimates to use the same data in all cases and this has been done in figuring the financial results. This is not to be taken as either an endorsement or disapproval of this feature of the former plans. The policy as to transfers involves the plan of financing the undertaking, the lease of the system and other features discussed in this report. The Department now feels that this matter of transfers should be left to be worked out in connection with the financial plans and the operating lease, which must be finally pa.ssed on by Councils and tlie Public Service Commission. This element is only brought into the situation on tlie assumption that the Philadelphia Rapid Transit Company will be the eventual lessee and operator of the municipal rapid transit lines. Should these lines be leased to an independent operator the two systems may be operated independently and the same condition will then prevail as now exists in New York City, under what is known as the "dual subway system." This report contemplates the same transferring arrangement between lines as were as- sumed possible and desirable under the former plans, and all statements of earnings are comparable. 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The residential section of the city has expanded in area until the service of the present surface system is no longer adequate. The average citizen has come to feel that not more than 30 minutes should be spent in trav- eling from his home to his business, and probably, due to the socialistic ideas now prevalent, he has come to believe that if the present Company cannot supply these facilities, the City should supply them. He regards this as a proper field for municipal endeavor, and does not realize the magnitude of the problem or the burdens which it involves. Rapid transit lines are simply a development of city passenger transportation from sur- face lines, and their function should be to extend the usefulness of those lines and not to compete with them. The two advantages possessed by rapid transit lines over the surface cars lie in their higher speed and larger capacity. The higher speed results from their being free from interference with other traffic. The speed of the lines is a direct function of the number of stops per mile. With ten stops per mile the schedule speed would vary but little from that of the present surface cars. With two stops per mile a schedule speed of 16 to 17 miles per hour is entirely feasible. With one stop in two miles or over, a schedule speed of 25 miles per hour or higher may be attained. The capacity of the lines is a direct function of the length of the trains and their fre- quency. Results Due to Location and Routing. In all plans for rapid transit in Philadelphia will be found the feature that each is so de- signed as to supplement the existing transit facilities — not to act primarily as a competitor, although they must so act to some extent in the districts through which they operate. The lines have been so located as to shorten the time of travel between the residential and business districts of the city, and hence are located on as nearly radial lines as the street formation of the city permits. Since it has been found that a rapid transit line without feeders does not draw patronage from the territory through which it runs, to a greater distance than one-half mile on each side of the line, the natural inference is that such lines should be not more than one mile apart, and the recommendations in the Transit Commissioner's Report of 1913 are based on this spacing. This Report clear] j^ indicates also the great advantages result- ing to the citizens from the utilization of the present surface lines as feeders to these lines, it being assumed that the two systems can be operated as a merged or joint system. This Report also clearly shows that the advantages from rapid transit lines will largely accrue to the busi- ness district and to the riders from, and owners of land in, the district lying beyond a radius of four miles from the business center of the city. This system is not intended principally for the city of to-day — which lies mostly within the four-mile circle — but for the suburbs of to-day, the city of the future, the city of a million or more people who fifty years hence will reside in this area beyond the four-mile circle. 4 45 The comprehensive system of new lines now planned will mean a per capita investment of about $40, based on the entire present population ; but $120 or more, based on the population chiefly benefited (suburban). The chief advantage to the patrons of this transportation system lies in the reduction of the time needed to travel from their homes to the business center or their work. This is recognized as desirable — as tending to a better standard of living conditions, but in few cases can any money value be assigned to this advantage, as the saving is not in commercial or salable time, nor does it add to the rider's daily cash income. A fraction of the time now used in traveling will be diverted by the riders to other uses, mostly non-commercial — non-producing. Tlie chief financial beneficiaries of these new lines will be the real estate owners, operators and builders, in territory tributary to the lines, since, owing to the higher speed of these lines, land lying considerably more distant from the business district of the city than the present residential district is brought witliin the same time limit. The direct result of this can be shown to be a shifting of the population and an increase of the residential area outside of satisfactory surface car limits, increasing the average length of passenger haul. The rider in many cases simply moves out on the new lines until his travel- ing time becomes approximately what it is on the present system. It is greatly to be regretted that imder present laws it is impossible to assess any of the cost of construction of such a sys- tem upon the property benefited. It is entirely a fallacy to assume that the increased revenue from increase of general taxation di;e to such development will recompense the City for its transit development, as there is no such surplus tax income resulting. The Broad Stireet Line and Loop. The fundamental idea underlying the location of the Broad Street Subway was to utilize the main thoroughfare of the city ruuning north and south to provide rapid transit in a north and south direction equivalent to that provided on Market Street in an east and west direction. It is well recognized that while Broad Street is the main north and south thoroughfare of the city it has never developed as a business street to the extent that its central position would warrant. The larger trading establishments of the city are located along the east and west streets of the business district, principally east of Broad Street, and it was early found from the traffic investigation that a rapid ti-ansit line serving Broad Street only would be undesirable, as the destination of about sixty per cent, of the patrons of this line was in the territory east of Broad Street. This would have brought about a wholesale transferring of the passengers either to the Market Street Line at City Hall Station, or to the surface lines to an extent that could be provided for only with great difficulty. It was, therefore, realized that it was abso- lutely essential to carry part of this traffic directly into this eastern business district without transferring. A large number of studies were made and routes suggested and tried out. The so-called "loop" as finally decided upon and recommended in the original report of 1913 was the result of a compromise, and it is not necessary at this time to go into the reasons which forced or brought about its adoption. Some of the princii^al reasons have been given in for- mer reports of this Department. Objections to Loop. My objections to the "loop" plan are based chiefly on its objectionably high cost for the service of one line only, as the Parkway Line which is to be connected to the "loop" in the City Hall Station cannot be operated on the "loop" when the Broad Street Lines reach full capa- city, and its construction and operation violates Nos. 3 and 6 of the principles formulated on 46 ' This large loop recommended in Taylor Plans has the disadvantage or requring about two miles of very expensive construction in order to serve three important stations only. From North Broad Street Subway the distribution of passengers at the different stations on the "loop" will be as follows: To East and West Legs of the Loop City Hall Station 28.1% Chestnut Station 13.3% Eighth and Market Station 33.6% 75.0% To North and South Legs of the loop: Twelfth and Locust Station 2.4% I Tenth and Locust Station 3.0% I Tenth and Arch Station 9.4% ■i Twelfth and Arch Station 10.2% B 25.0% ^HH Locust and Arch Street legs inactive - This makes clear the reason for recommending the modified plan by which the 8th Street District is reached by the shortest route via Ridge Ave. and for using Walnut Street 28.17. I 13.3 'S''" ARCH ST Si'° IZ^*^St.5tdtion I0''"5t. Station C\\y Hall Station ^>n»}fw}fm>w/ BuSttiESS DISTRICT; 3urfacc Lines TransferrinA Termtna! > R/vpiD Tramsit Lime:- DIAGRAM ILLUSTRATING FUhCTIOH OF RAPID TRAMSIT LlIiES IM A UNIFIED 5Y5TEM AND THEPRIhClPLEOF THR0U6H ROUTING The Ideal Local Transportation System for a Population of 3,000,000 Within a Circle of 12-Mile Radius. These limitations have been taken because it is doubtful if a single five-cent fare can ever be profitable to a unified system beyond such limits, except by assuming a density of popula- tion greater than is now considered desirable. To accomplish it (if ever possible) full use must be made of surface and rapid transit lines, each to the economic limit of its possibilities. The fundamental basis of the ideal design for such a system is to divide the area into three transportation or traffic zones. In each zone the surface lines constitute the local system, and in the outer two zones these surface lines concentrate the local traffic at convenient points or terminals from which rapid transit lines run radially and directly to the business district. In the outer two zones practically all riders must transfer at the terminals from one system to the other. 48 Hi^h 5pccd Surface Lines Tran5ferrinj;}=) ' Terminal ^ o Surface Lines Rapid [Busimess District \ "^Sl Market street 'l,„,,,i,,,,,,,,l,,:ii:^/'/,y ,,,,iy//r/,//lmrrr„^, Surface Car Termincil DIAGRAM 5K0W1MG APPLICATIOh OF PRINCIPLES APPLIED TO EXISTING COnOlTIOriS IN WEST PHILADELPHIA The time of travel practicable to secure and generally considered by the public to be a reasonable time of transit between residential and business districts has been assumed as follows : Length of Journey Zone Service Eapid Transit Surface Jo™r^nev ,}:}T\ .^rr'> (Minutes) , (Miles) (Miles) "• ' First All surface car 4 25 Second Rapid Transit (Local) and Surface combined 4 3 30 Third Rapid Transit (Express) and Surface combined 7 4 to 5 35 _. Total o ■ Speed ^\ Time of First Rapid Transit Surface 9 25 25 Second Rapid Transit 16' 15 Surface 12 15 30 Third Rapid Transit 25 16 to 17 Surface 15 16 to 17 32 to 34 Beyond the third zone the territory is considered in the region of additional fare or com- muters' zone of the steam roads. 49 Diagram No. 2 shows this plan as applied to ai: ideal round city, and Diagram No. o shows the same principles applied to Philadelphia as far as its topography, population and street layout permit. Under this design of a unified system, the rapid transit lines perform four functions : 1. That of terminal facilities in the business district. 2. That of channels for conducting traffic flow through the congested or older and already developed sections of the city. 3. That of supplementing the surface car system — not competing with it for traffic. 4. That of supplying improved service to the outlying sections of the city — the "long haul" rider. lu order that it may fulfil this second function properly, economically and at high-speed, the line serving the Second Zone should have few stations between the business district and its terminal, and the line to the Third Zone but one station (at the terminal of the line to Second Zone for transfer purposes). The lines when possible should for practical reasons be foiir-track through the First Zone, and when extended to the Third Zone should branch into two or three lines, each wholly ex- press, with the exception of the one stop at the end of the First Zone — in order to obtain highest schedule speed and operation efficiency. Actually this can seldom he done, but stops on these lines should be made only where imperative. Rapid transit lines in such a system are not for local service within the 25-minute zone of surface cars, but to bring a larger zone within that time limit. They are not to provide special facilities for a few favored localities, but to better conditions for the whole district which they serve. Rapid transit lines are necessities in, but not for, the present surface car zone. They must run through this zone in order to reach the zone which they are properly intended to serve. They are the trunk arteries of the system and not the small veins and capillaries, that function being filled more suitably by the surface car system. Rapid transit lines used locally witliiu the surface ear zone are luxuries. Their proper function in Philadelphia in a unified system is to bring a larger mass of people within 30 minutes of the business center for the least capital outlay, that is, to serve the greatest number of people acceptably with the least burden upon all. In a unified system, rapid transit lines should be used as express routes only, for limited trains running between terminal points, thereby supplementing and extending the use- fulness of the local surface street ear system, of which they can never take the place. The surface car is a transportation entcri^rise using single cars and doing business on a retail plan. The rapid transit lines are for wholesale transportation, and should never be used where the retail method is more suitable. Just as in coouuercial l)usiness, a large number of retail dealers are needed to support one wholesale house, so in this line, a large number of surface lines are needed to gather or collect local passengers in the districts four miles or more from the delivery district, and deliver them to the rapid transit lines for transportation in wholesale quantities to the delivery district. — See Map No. 3 of "Ideal Transportation System as existing in West Philadelphia." Ideal System (a Unified Plan of Operation) Applied to Philadelphia. The diagrams attached should make clear the i:>roper function of rapid transit lines in a unified system, showing what would be the ideal arrangement and what I consider the best 50 0^0 COMMUTCRs- ^ ^I*- 6CV0HD kmile: rao/us 'Op^ CITY or PHILADELPHIA DCPARTMEMT OF CITY TRAM5IT DIAGRAM OF AN IDEAL TRAM5PORTATIOM SYSTEM , Rapid Transit Trunk l.in«s ■ Surfaca F««dcr» io Rapid Transit Trunk Lines LcqcnD ... «^ _ Rapid Transit Trunk Line extensions through Iha Second Zona Surfac« Feeders to Rapid Transit Extensions DIAGRAM NO. 2 LU iT) O Z in UJ '->=: uj D 5! -" S^ 2r < i_ o- uj '-J C K i- DIAGRAM NO. 3 MAP NO. 3 compromise for the present as applying to Philadelphia conditions. Here it is evident that "ideal" conditions exist in two directions only — north and west. Broad Street and Market Street are the only thoroughfares reaching the business district of sufficient width to permit the construction therein of four tracks. The plans provide for four tracks in Broad Street north, but only two tracks south of City Hall. Quite probably before the South Broad Street Line is built it may be desiraible to so change the plan as to provide four tracks to the south also. In ]\Iarket Street four tracks have been provided from Juniper Street to the west side of the Schuylkill River only. Owing to the favorable street arrangement near Thirty-second Street it has been possible to utilize the surface car system on a plan similar to that of Boston in its Tremont and Boyleston Street Subways. At Sixty-ninth Street the local rapid transit line transfers to a comprehensive system of high-speed surface lines connecting with outlying towns and serving the large adjacent sub- urban territory. It so happens at Sixty-ninth Street that owing to different ownership of the feeder lines, this is the start'of the second fare zone as well as the second traffic zone. As but two tracks for train service have been built in Market Street, express service at 25 miles per hour as defined in this report is not now possible. (See Map No. 3.) Ideal rapid transit service will not be possible for any suburban district under the present plans excepting directly to the north, via Broad Street Subway. When the express tracks of this line are next extended, they should be extended by two elevated branches, each about three miles long. There is no economic necessity or strategic reason for naming Olney Avenue as the north- ern terminus of this route, as it is not an important traffic center. On all other lines, owing to the limitation of street width, two tracks only are provided, and local rapid transit service with half-mile stops will be given at a schedule speed approxi- mating 16 miles per hour. Lines with three tracks are not desirable for Philadelphia conditions. The Middle Zone of the City and Its Transportation Problems. The principal developed section of Philadelphia, lying within the four-mile circle and con- taining 1,250,000 people in 1913, covers what may be considered as the surface car zone of eco- nomic service from a standpoint of time, as the running time from the business district inside of this zone should be from 25 to 30 minutes, based on an average speed of 8.8 miles per hour, and my observation has been that there is comparatively little complaint where good surface ear service is maintained within the four-mile limit. The chief complaint seems to be not the car service, or the time involved, but the 8-cent fare which is troubling the people within this particular district. Outside of this district the 8-cent fare is not the chief cause of complaint, but the time element appears to be. The modification of the "1907 Contract" which has been proposed in connection with these new lines, is expected to remove the cause of the complaint as to the service within the four-mile circle, and the constriiction of the municipal rapid transit lines will remedy to a greater or less degree the complaint of the suburlian districts. The Suburban Zone Service. Regarding the service in the suburban districts by a direct line as compared with the ser- vice wliich will result from the present lines terminating at important junction points, it may be 51 well to discuss the matter in connection with the proposed temporary ending of the North Broad Street Line at Broad Street and Erie Avenue. The only large body of population lying beyond the four-mile circle lies to the north, north- east and northwest, comprising the North Philadelphia, Germantown, Chestnut Ilill and Rox- borough districts. The Northeast Section will be well provided for by the Prankford Line to Bridge Street. The North Philadelphia, Germantown and Chestnut Hill sections should be satisfactorily served for the present by the Broad Street Line with the temporary terminal at Erie Avenue, and Roxborough will be greatly benefited by bringing the Ridge Avenue surface line directly east on Allegheny Avenue and transferring to the Broad Street Subway at Broad Street and Allegheny Avenue. Service in the Germantown district by a direct line to Germantown and Chelten Avenues as compared to the service herein recommended may be discussed here as an example. The distance from Erie and Germantown Avenues to Chelten and Germantown Avenues by the Germantown Avenue surface line — the most direct route — is 2 1/3 miles and the schedule running time of the present surface cars is 15 minutes. The distance by way of the rapid transit e.\tension passing through Logan is 3.3 miles from Erie Avenue with a schedule running time of 11| minutes. Assuming a person were directly at the intersection of Germantown and Chelten Avenues, the maximum saving of time which 1 would result would be 3^ minutes in time of transit, plus 1 minute for transferring at Broad Street and Erie Avenue. Inasmuch as the district within the five-minute walking zone of Germantown and Chelten Avenues is largely business, and will contain relatively few passengers for the rapid transit line, it is a fair assumption that the majority of the patrons boarding the rapid tran.sit line at this point will be brought there by means of a surface transfer, so that the time of transfer at this point will probably be twice as long as at Erie Avenue, because at Erie Avenue there would be twice the train frequency of the branch lines, so that for any one not within walking dis- tance of the station the actual time saving will only be 2| minutes. Based on the present traffic figures, only about 9,000 passengers per day would use this station, and a considerable portion of this traffic will be business diverted from the steam roads on Account of lower fare, and not on account of time saving. The relatively small advantage to even this, the most populous district in the suburban ter- ritory, does not warrant the expenditure which would be involved in serving this district with a subway and elevated line, the cost of which if built from Broad Street at Logan would be $2,100,000, or $4,750,000 from Broad and Erie Avenue. The logical method of reaching Germantown and Chelten Avenues at some later date is shown on Frontispiece and Map No. 1 by means of a branch from the Twenty-ninth Street — Roxborough Lino, and following on private riglit-of-way the east line of the Pennsylvania Rail- road to Chelten Avenue, and thence along Chelten Avenue to the terminal proposed. Efifect of Rapid Transit Lines in Distribution of Population. The time by surface car to-day from the Prankford district to the center of the city is about 45 minutes, the distance being so great that the Prankford rapid transit line will only bring that district within the 25-minute time limit of the street car zone ; hence it is extremely doubtful whether there will be any extensive development beyond that point, as it will have to compete for population with other districts with more favorable time of transit. 52 MAP NO. 4 Tlie Frankford district must not expect to duplicate the development which occurred in West Philadelphia, for the district west of Forty-fifth Street, in which the largest development occurred, averages less than 15 minutes by the new rapid transit line from the heart of the business district; the Fraukfurd district is twice as far and this must be given full consider- ation. The Broad Street Lines, as now planned with a temporary terminal at Erie Avenue, will deliver people at Erie Avenue within 14 to 15 minutes, leaving a 15-minute zone for the use of surface cars, and bringing this large area within the same time limit as Erie Avenue on the surface system. The attached Map, No. 4, shows the increase in 30-minute time zone area which will be added to that zone, with the line terminating at Erie Avenue, and the additional area that will be brought within the zone should the line be extended to Olney Avenue with elevated branches on the Northeast Boulevard and to Germantown. A study and comparison of these areas should be convincing proof that the Broad Street Subway should terminate for the present at Erie Avenue. (See Statement 8.) Discussion of Principle of District Assessment for Local Benefits. The principle of assessing the property for at least a portion of the cost of the city im- provements necessary for its modern development is recognized in a more or less complete form in Philadelphia. It may be well here to discuss its application to this transit problem of Philadelphia and show how localities benefited should divide the burden. ■ The chief benefits resulting from the construction of rapid transit lines will accrue to two zones of the city: (a) the business district, which may here be defined as the district contained within a one-mile radius drawn from Eleventh and Market Streets, and (b) the districts lying outside of a circle drawn with a radius of four miles from the same point. The middle zone lying between the first and four-mile circles will proibably be affected very little by these lines and only along the lines themselves. As all estimates of growth of population in Philadelphia show that within 50 years or less the population in Philadelphia proper and the vicinity will exceed 3,000,000, and inasmuch as the available land now lying within the four-mile circle is practically all developed, excepting south of Oregon Avenue, the future growth will be largely distributed over the area outside of the four-mile limit, and in this district will oCvnir the greatest rise in land value. Outside of the comfort and convenience resulting from the construction of these improved facilities, the direct commercial profits will accrue very largely to the two districts mentioned. In the bu.siness district the direct result will be a much larger volume of business trans- acted and consequently a higher value for business locations in certain parts of this district. In the outlying lands a large financial benefit will result to the land owner by virtue of these lines bringing this land into the market for residential purposes. The method proposed in this report of financing these improvements is based on the idea of placing the burden of carrying charges on the district receiving the principal benefit. The district lying between the one- and three-mile circles will receive comparatively little direct benefit from the building and operation of these lines, but there seems to be no feasible way of leaving this section of the city out of the calculation, as this land is already improved and fairly well served now by the present surface car system. Actually this zone should carry but a small part of the burden, and that part only on the section lying along and benefiting by the lines. While the rapid transit lines will draw some business from the territory inside of the four- 53 mile circle, they must be considered in that zone as trunk lines or channels connecting the resi- dential district with the business district, and not built primarily to serve the intermediate dis- trict, consequently these form the main and terminal sections of the system, and may, therefore, be paid for by general bond issue. The more or less radial extensions running; beyond the four-mile circle and into land which is largely undeveloped, may properly be considered part of the cost of real estate development, and the financing arranged for before the construction actually takes place, upon the basis that the property benefited by their construction and operation should assume the resulting burden. The territory which has already been developed, such as now lies within the one- and four- mile circles, is very slow to change and undergo further improvement. The tax records and statistics show that very little change has taken place in this district in recent years. The report herewith appended (see Appendices A and B) shows that while some advan- tages may accrue to this intermediate portion of the city the great financial advantages accrue to what are now undeveloped stiiurhan districts. This plan of district assessment for improvements is now permitted under New York leg- islation, and the Utica Avenue Elevated Line in Brooklyn is being built by local assessment of the property benefited. To show that property owners in Philadelphia realize the advantages and are willing to co-operate, a prominent resident inquired recently whether the City would favor some of the exten.sions beyond what are herein suggested for immediate construction, provided the bene- fited sections would assume the burden of the interest charges locally. Under Pennsylvania laws now existing this cannot be accomplished unless it be with the voluntary consent of the aifeeted properties. (See Appendix C.) As showing the justice of the position herein outlined, let us discuss the extension author- ized by Councils of the Prankford Elevated Line from Bridge Street to Rhawn Street. This would provide for an extension of about three miles and if extended as an elevated road along Prankford Avenue would probably cost from $1,500,000 to $1,800,000. If con- structed as a surface high-speed line on private right-of-way without grade crossings (the pref- erable plan), it would probably cost $600,000 or .$700,000. This extension would benefit all the property l.ying between the Pennsylvania Railroad on the east and the Northeast Boulevard on the west, comprising 2,000 aeres or more. Assuming that the line is to be constructed as a surface high-speed line on private right- of-way at a cost of $700,000 this construction cost would amount to only $350 per acre if assessed equally upon the zone directly benefited. If bonds be issued by that district for the cost of the construction, the carrying charges would probably run not more than $18 to $20 per acre per year. On land to be developed, this is a burden too small to be considered as it would only represent $1.00 or $2.00 per lot per year during the life of the bonds in the territory when de- veloped. It may be claimed that such a plan will place too heavy a burden upon suburban land. If this be true, then evidently the development is premature and the extension not needed until it will bear the cost of its development. The main advantage of the principle of assessing locally the cost of developing such sub- urban property is that it acts as an automatic check to the demand for unwarranted extensions, which clamor now has underlying it as a large factor the desire to get private advantage at the City's expense. Under this ]i]an the land owners, who are now most interested in such exten- sions, will not clamor for it to be made until they are willing to bear themselves part of the burden which the City would otherwise assume in its construction and operation. Prom Rhawn Street northeast to the City Line is a very considerable area of the city which 54 might with equal justice clamor for improved service at the City's expense, but as the time of travel increases with each addition to the extended lines, the outlying land becomes less and less desirable for residential development of the type popular in Philadelphia. How are the Bills to be Paid for Constructing and Operating the Rapid Transit System? Under the "Taylor Plan" all money for construction is to be raised on the City's credit by issuing City bonds for the entire amount. All equipment is to be furnished by the operat- ing company. Under the plan herein suggested only the trunk and terminal portions of the system are to be financed and paid for on the City's general credit, out of City bonds. The outlying and suburban sections are assumed to be built, or at least financed, on bonds secured by local assess- ment upon the real estate for properties benefited by the construction and operation of these extensions. The following table gives the lines considered as terminal or trunk lines, and the lines con- sidered as branch or suburban lines, and the relative proportion of the City's obligation and the local obligation involved : TRUNK AND TERMINAL LINES TO BE FINANCED BY CITY BONDS. (Shown in red on Map No. 5.) Estimated cost, „,, , , including real When to be estate. ^"^l*" 1. Prankford Elevated to Bridge Street $6,000,000 Step 1 f Broad Street Subway— Pike to Spruce Street 18,400,000 ] 2- I Ridge Avenue, Eighth Street, Walnut to Sixteenth Street 7,200,000 j ^^'^P ^ ( Parkway— Twenty-ninth Street to Hunting Park Avenue 6,200,000 Future 3. I Southwestern Line — via Broad, Federal and Woodland Avenue 5,500,000 Future I South Phila.— Broad Street, Federal to Oregon Avenue 2,600,000 Future Total $45,900,000 BRANCH LINES AND EXTENSIONS PROPOSED TO BE FINANCED ON PRINCIPLE OF ASSESSMENT OF LOCAL BENEFITS. Broad Street, Pike to Olney Avenue .$4,300,000 Broad Street, Oregon to League Island 700,000 Northeast Branch on Boulevard 1,500,000 Roxborough Extension from Twenty-ninth and Hunting Park Ave. 1,800,000 Germanto\vn Branch 2,100,000 Frankford Elevated extension to Rhawn Street 1,800,000 Byberry Line 1,100,000 Total $13,300,000 Grand Total $59,200,000, oo This total does not check with the estimates as given in table of comparative outlay as Darby Line outside of City Line is omitted from these figures and routes do not exactly cor- respond in the two estimates. (See Statement 7.) The following quotation from a paper by Nelson P. Lewis, Chief Engineer of the Board of Estimate and Apportionment of New York City, expresses these principles in such shape that I quote from his paper as follows: "The general principles which should, in the writer's opinion, govern the distribution of the cost of city improvements may be briefly summarized as follows: "1. Where there is local benefit, there should always be local assessment. "2. The entire city or the metropolitan district should bear no part of the expense unless the improvement is in some degree of metropolitan importance and benefit. "3. Assessments should not be coniined to the cost of acquiring and improving streets, but should extend to any improvement which will increase the value of the neighboring property, and should be apportioned as nearly as possible according to the probable benefit. "4. A workable policy once adopted should be consistently adhered to. "5. The determination of a policy and its application to each case should be entrusted to a board composed of men especially qualified, whose terms of office should so overlap as to insure continuity of policy and purpose." I have never heard any real objection made to the principle, though objections arise as to the practical method of application. At present such methods for rapid transit construction in Philadelphia appear to have no legal basis, and I would urge that whatever enabling legisla- tion may be necessary the City should obtain at the next session of the Legislature, so that this fair, just and equitable method of financing these lines may be available for use at the City's option. The principle of assessing projierty for city improvements is already well established, the original cost of pavement being charged against the abutting property, as well as certain costs for sewers, water pipes, etc., which are recognized as necessary for the development of the prop- erty. Trunk and main sewers are charged against the city as a whole, local sewers being charged against the property benefited. Logically there is no sound reason why a portion of the rapid transit system in the suburban district, which is equally as necessary as the sewerage sys- tem, should not be charged in part at least against the property benefited. (See Appendix C.) Alternate Method of Financing Branches and Extensions of the Trunk Portion of the System. In ease it should be found undesirable or inexpedient for any reason, legal or otherwise, to finance the cost of extensions by means of special bond issues assessed locally on the property benefited to meet the carrying charges, I would make the suggestion that an alternate method of placing the burden of these extensions on the territory and people benefited may be found in a proper adjustment of the rate of fare of the rapid transit lines in such sections of the city, this rate of fare being periodically adjusted so that it would grow less as the section builds up and becomes more thickly populated and the number of riders increases per year, it being placed at a figure at the beginning which will not be prohibitory. 56 This alternate method has the same advantage as local assessment of the property — acting as an automatic cheek on unwarranted demands for extensions and thus protects the City Treasury. The additional fare required on each extension could be approximately determined in ad- vance, and while it would be somewhat troublesome to work out the practical difficulties of a two zone system with transfers and different fares in the two zones, I believe it is not impos- sible to accomplish such a result if deemed desirable. 57 MAP NO. 5 r- SUGGESTED IMPROVEMENTS IN THE PLANS FOR RAPID TRANSIT DEVELOPMENT Suggested Improvements in the Construction Program of the Taylor Plan. Briefly, it may be here stated that there is no intention to suggest changes in the location or extent of the main radial rapid transit lines recommended in the "Taylor Plans." The change contemplated is not in the main routes themselves — the improvements suggested herein relate chiefly to what I consider an unwise and unbusinesslike proposition to build these lines all at once, and to carry them into suburb.m districts now very thinly populated — into sec- tions which should for several years at least be served by surface lines. I strongly favor the breaking up of the construction program into a series of steps with, as yet undetermined, intervals of time between the steps, so that the construction program will be extended over a period of years and the City and the operating company will be able to digest and assimilate the results of each step before another is added. In outline the suggested construction program consists of: First. A progressive step method of construction whereby the Frankford Elevated be- tween Arch Street and Bridge Street, and the Broad Street Subway between Spruce Street and Erie Avenue, will be constructed first, leaving the extension of the former to Rhawn Street, and the extensions of the latter to League Island, Olney Avenue, Germantown and the Boule- vard (as provided by Ordinance of Councils and authorized by the people in the $6,000,000 loan) until a later date, at present indeterminate. Second. A change in the lines of subway in the business district whereby the delivery area will be more directlj^ reached, the stations more advantageously placed and the cost of construction lessened. No change is now contemplated between Ridge and Erie Avenues, but it is proposed that on the south two of the four tracks be diverted at this point to pass by way of Ridge Avenue, Eighth Street and Walnut Street to near Sixteenth Street, leaving only two tracks to continue southward in Broad Street. Also, it is proposed that the future Parkway Subway to the north- west be designed to turn down Sixteenth Street and into Walnut Street, thus providing for the viltimate routing of some of the North Broad Street trains through to Roxborougli by way of Eighth and Walnut Streets, while the remainder will be routed through to League Island, and the Southwestern Line through the Fortieth Ward. This change in the Parkway Line does away with the need for four tracks south of Filbert Street, and with the need for a junction station under City Hall. Therefore, it is proposed to change the line of the two Broad Street tracks between Arch Street and South Penn Square so as to permit the placing of the City Hall Station at Filbert Street, where it can be brought nearer to the surface of the street and where it will cause less congestion of trafiSc and will cost far less to construct. (See Map No. 6.) 59 Suggested Construction of Comprehensive System in Successive Steps. Construction Step No. 1. Complete the Frankford Elevated to a point at or near Bridge Street on the northern end, and build the section from Callowhill Street south, connecting with the existing Market Street Line of the Philadelphia Rapid Transit Company, permitting the Frankford Line to be through-routed with the present Market Street Line. Although the present ordinance, under which the Frankford Line is being constructed, au- thorizes the building of the road north of Bridge Street as far as Rhawn Street, I do not con- sider it desirable that it be built north of Bridge Street at the present time. Even if it he legally decided that it must be built, that will not change the economic fact that it is not now ivarranted. The territory lying north and northeast of Bridge Street should for a number of years be served and developed by trolley surface feeders, which in this district, for several years at least, should be able to run at a schedule speed of at least 12 miles per hour. This speed is now maintained by trolley lines connecting at this point. Under these conditions the City is not warranted in spending a large amount of money for the elevated construction as the maximum time saving to passengers living at Rhawn Street cannot exceed three minutes. This difference is too small to warrant the use at present of anything more expensive than high-speed surface trolley lines on private right-of-way. Fur- thermore, Philadelphia should not, like New York, make the serious mistake of building high- speed elevated lines into relatively remote suburbs and ignoring the capabilities of siirface lines as transportation feeders. There is, furthermore, this point for consideration: Bridge Street on Frankford Avenue is now the present limit of the 5-cont fare zone from the center of the city, and any extension beyond this should be seriously considered in view of its evident effect on the operating lease of the City's system. An independent company is now operating the surface trolley line north of Bridge Street along Frankford Road to City Line, connecting with lines operating into Bristol and Trenton, and legal complications might ensue, together with opposition from the Public Service Commission if the City entered this territory as a competitor. Construction Step No. 2. Build the North Broad Street Subway from a point near Erie Avenue on the north to Ridge Avenue on the south as a 4-track construction, dividing at Ridge Avenue into two 2-track subways — one pair of tracks extending south along Broad Sti-eet to a point near Spruce Street, the other pair of tracks turning east along Ridge Avenue to Eighth Street, south on Eighth Street to Walnut Street and west on Walnut Street to a point near Sixteenth Street. On the lower end both lines would terminate in stub-terminals until the connections for through- routing are established, as stub-terminals will provide sufficient terminal facilities for 30 trains per hour. This would form the first section of the line and is in conformity with principles Nos. 1, 2, 4, 5, and 7 enunciated on page 12. Importance of Erie Avenue a^ Temporary Northern Terminal of Broad Street Lines. At no other point along the Broad Street Line is it possible as it is at Erie Avenue to focus readily a large number of surface trolley lines which by transfer can utilize the high-speed lines to hring the passengers which they may have collected into the center of the city. This utilizes 60 UJ I- o LJ LjJ4- /^< o » UJ a: < u. < DC I- I I UJ z: O cf > >> J— Q < Q L n ^^ < ^ o -ci t^ o +- «« O Q o 5 o o m or o 000'0l=*ul -Sa^QKlBSSVd DIAGRAM NO. 4 the surface lines efficiently in the territory north of Erie Avenue and reduces the operator's investment and the car mileage by about twenty-five per cent, as compared with operating the two extensions above Erie Avenue. As this reduces both the operating expenses and interest charge coming ahead of the City's share of the earnings it is greatly to the City's advantage, as is evident from the statement of operating results attached. (See Statements 5 and 6.) It will be noted that this will require the opening of Ridge Avenue through the block at Eighth and Ninth Streets in accordance with the plans for the "Traffic Circuit," which have formerly been proposed. Walnut Street Line. Walnut Street is now suggested in place of Locust Street for the location of the south line of the subway, chiefly because it is planned that this line will eventually be extended to Six- teenth Street, and north on Sixteenth Street to the Parkway, and then in a northwest direc- tion to serve Roxborough, Germantown, etc. Farthermore the delivery on Walnut Street will be more desirable than on Locust Street, and to that extent will reduce objectionable transfer- ring. For this side of the route Chestnut Street might be more desirable, as it will involve building 1,000 feet less of subway and provide better delivery for passengers, thereby reducing transferring; but Locust Street can be used if deemed absolutely necessary for other than tran- sit reasons. Walnut Street is suggested as a compromise, believing that Chestnut Street should be left open for occupancy of future lines. Locust Street was originally recommended for the south leg of the "Delivery Loop," be- cause it was then expected that it might promptly be widened to 134 feet, and also because it is impossible to place a station at Broad and Chestnut Streets unless this side of the Loop be taken south to Locust Street. As there is no immediate prospect of widening Locust Street, and as the curves and switches which formerly controlled that location are eliminated in this plan, there is no engineering rea- son why either Chestnut Street or Walnut Street may not be used for this portion of the Broad Street-Northwestern Route. As the number of streets in the business district available for use by rapid transit lines is very limited, I feel that it is very important to use such streets efficiently; that is, pass trains through the business district only once per trip and use only one street as the terminal of two radial or trunk lines. This, if for no other reason, should force the adoption of through-rout- ing operation. Temporary Stub-End Terminals. The method of operation favored in this report would utilize stub-end terminals at the northern, southern and western ends of these lines as these stopping points are considered tem- porary, to be used only until exten.sions are built on the northern end and additional lines are brought in and connected on the lower ends, so that through-routing operation can be insti- tuted. Train Capacity. The Broad Street Subway and Loop, as originally recommended, was designed to have a maximvim ultimate capacity of forty 10-car trains per hour over each track (400 cars per hour). 5 61 The present ^Market Street Line of tlie Philadrliihia Rapid Transit ('nnipaiiy is (iperated with a stub-terminal on tlie eastern end at South Street Ferry, and is handling a maximum of thirty-four trains per hour. The proposition, therefore, to use stub-terniinals at Broad and Spruce Streets and at Six- teenth and Walnut Streets until such time as these lines are extended, is a perfectly good busi- ness proposition, as there is every probability of these lines being extended long before the Broad Street section has reached 75 per cent, of its maximum capacity. Under this plan the important commercial district in the neighborhood of Eighth and Market Streets, and the financial, hotel and railroad district along Broad Street north of Spruce Street, will be served equally as well as by the present recommended plan, and by using the di- rect route along Ridge Avenue the running time from Erie Avenue to Eighth and Market Streets will be approximately the same as to City Hall Station. Under these modified plans, the time of transit between Erie Avenue and Eighth and Mar- ket Streets will be 13 minutes, a saving of 2^ minutes over the time required in transit between these two points by the former "loop" route. Reasons for Constructing Four Tracks on Broad Street. The wisdom of recommending the construction of four tracks in Bi-oad Street between Ridge Avenue and Erie Avenue may be questioned in view of the fact that one of the avowed reasons for limiting the amount of construction work is to reduce the initial capital outlay, and it may reasonably be inquired whether it will not be better to construct two tracks only in Broad Street at this time and divert the money thus saved to the construction of one of the other branches, such as the Parkway Line or the Woodland Avenue Line. In the Transit Commissioner's Report of July, 1913, will be found Plan No. 56, showing that this plau was originally considered, and the original estimates were prepared on a basis of both four and two tracks. At that time the estimated cost for the 2-tra(k line from Race Street to Olney Avenue was approximately $14,000,000, and the additional amount required to add two additional tracks in the section, between Race Street and Erie Avenue, anuninted to about $5,000,000, or about 30 per cent, additional. As the estimated traffic on the Broad Street Line will be beyond the capacity of a 2-track subway (400 ears per hour — one way) after 19.50, it is not deemed advisable to recommend the building of two tracks now and in a few years again tearing up the street for the purpose of adding the other two tracks. Should the Parkway — Twenty-ninth Street Line to the northwest — be Imilt by 1930, two tracks on Broad Street will be ample for several years beyond that date. This question, in view of the service needed by the Parkway, may propi-rly be the subject of a further discussion and report. The amount saved on the North Broad Stri-et Line will not be sufficient to liuild either of the other branches, and it may cost as much as $10,000,000 to add the other two tracks after 1930. It seems to be a better plan to finish eacli section of the route complete as far as it may l)e carried rather than to again disttirl) the street — jiarticularly a street like Broad Street, which is the main automobile thoroughfare north and south. Should the line be leased to an operator independent of the Philadelphia Rapid Transit Company, I might advocate the building of only two tracks now, as the interval before the othei' two tracks will be needed will be several j'cars longer. 62 V||' £.RIEA\^£.Tizrminal8c II Transfer 5fafion , l|| {Morfh Endof 5hpt1o.Z) AU-EqHENY'i}\\'iAVE. STATIOrf N.PHILA. [(ill EXPRE55 STA. CUMBERLAND Dlj |D 5T. 5TATI0ri SUSqUEHAIiNA \im AYE.5TATI0/i COLUMBIA ^\\hAVE.5TATI0N q-IRARDAVE.m EXPRE55 5TA. X,, "^■^i^ SRqARDEtlST. ^}^^5TA'y^5PqARDEN 5T.5TA. V /A II PR£5EriT Market 5T.5uBWAr-ELEYAT£D \ '^Wc^ff_ ^^ //) I ^nCheifmjf 5t (fiaf rnjafsUf, tla^ 'T' T^-r^^'' iVi,fnuf3f \ . ^Erf5IOM -itSprcfce Sf 00 _ . jl =1 FedenafSf ! II II I r •I Fu^un: Exfansion \TQ LEA(?UE ISLAND CITY OF PHILADELPHIA DE PARTMENT OF CITY TRAN SIT DIAGRAM OF MODIFIED RAPID TRANSIT SYSTEM WITH THROUGH ROUTING (Steps 1 and 2 shown in RED) DIAGRAM NO. 5 When the territory north of Erie Avenue develops sufficiently to require rapid transit ser- vice beyond that point, four tracks will be needed from the business center to Erie Avenue. Conxiniction of Camden Tube. Under a proper franchise, subject to proper governmental permits and restrictions, per- mission may be granted the Philadelphia Rapid Transit Company, or a subsidiary lessee com- pany, to construct a tunnel connecting the Market Street Line with lines running into New Jersey, to fee built entirely with private capital and to be operated under such terms as to fares, etc., as may be agreed upon. Successive Steps and Extensions in the Future. Step No. 2, which constitutes the trunk or terminal section of the Broad Street Subway, .should, at later dates as yet undetermined and to be fixed by the development and traffic neces- sities of the city, be utilized to its fullest extent by building rapid transit lines and extensions to connect therewith, (a) to Roxborough and Germantown, (b) Southwest Philadelphia, (c) South Philadelphia, (d) Logan, Olney and points north of Erie Avenue; these lines to be built at such times and in such sequence as traffic may warrant. A comprehensive plan of through-routing will become effective only when such lines are built. The complete system is shown in diagrammatic form on Diagram No. a. Time of Construction and Operation. The time needed for the construction of Step No. 1 should not vary to any extent from that outlined in the Transit Commissioner's Report of 1913, except insofar as it may be necessary to delay the final completion of the lines until it is finally determined whether they shall be leased to the Philadelphia Rapid Transit Company or to an independent operator. To com- plete Step No. 1 (the Fraukford Elevated) will probably require about one year after the exe- cution of an operating contract. The time necessary to complete Step No. 2 will be practically the three years allowed under the former program, inasmuch as the time necessai-y to complete the entire line should be the time necessary to complete the most difficult or slowest section of the line. If the money be available and the contracts a-warded during the fall of 1916, the lines should be in operation by the fall of 1919. Comparison of Cost of Construction — Amount of Loan Suggested. Appended to this report will be found a comparative statement showing the estimated cost of the comprehensive con.struction program as outlined in the 193 5 Annual Report, and the Steps Nos. 1 and 2 as suggested in this report. (See Statement 7.) As previously stated in the 1915 Report a loan of $.50,000,000 was requested to carry out the construction program as outlined. The estimates used have been the same in each case as far as possible based on the average prices prevailing in the last two or three years for contract work of similar character in New York and other cities. In view of the rapid rise in the cost of steel, cement and labor, which is now takituj place, beginning ivith the latter part of 1915, it 63 may be douhtcd whether the work can be contracted now on the basis of these estimated prices. In order to provide against tliis or any other contingency, I have deemed it wise to ask that the authorization by the people at the present time for the completion of construction of Steps Nos. 1 and 2, be made $35,000,000, although this figure should be considerably in excess of the amount absolutely required, now estimated at about $25,600,000. Bonds should be issued under this authorization only as needed, hence this authorization should in no wise burden the City with unnecessary interest charges or with funds lying idle in the City Treasury, and any balance not used on Steps Nos. 1 and 2 will be available for future steps of the construction pro- gram. Why is Construction in Progressive Steps Advised? For reasons that are largely financial, I advise that the City's program for improved tran- sit facilities be made to ^gree with the City's actual needs for such facilities. The comprehensive system called for by the latest "Taylor Plans" if constructed at the present time will doubtless call for an outlay within the nest three years in excess of $63,000,000 ; $6,000,000 has been appropriated for this work, leaving approximately $57,000,000 necessary to complete this system. A loan of $50,000,000 was requested in December, and according to a statement of the Controller, $69,000,000 of the City's borrowing capacity is available and may be applied to this purpose. To many people it will probably seem strange, that with this large amount available, there should be recommended at this time the expenditure of less than $30,000,000, and the con- struction of but two initial stei:)s of what is intended to eventually be a complete rapid transit system. The reason for keeping the initial expenditure within a conservative limit is that any ex- penditure in excess of this amount, particiilarly at this time of abnormally high prices, becomes an unwarranted burden. A table is appended to this report giving a comparison of the amounts of the City's direct obligation on the different plans. (See Statements 5 and 6.) The results are summarized on Statement 2. In the face of such figures, any proposal for an initial expenditure greater than stated cannot be justified. Full consideration has been given to the incidental advantages resulting from other rapid transit lines, and from extensions beyond tlie points now advocated, and the construction con- templated in Steps Nos. 1 and 2 is the result of careful study and consideration of any advan- tages which the City might derive from a more extensive initial construction. The final "Taylor Plans" construction program represents a construction outlay of over $60,000,000 and a deficit in fixed charges will accrue by 1940 in excess of $30,000,000, making the total cost to the City over $90,000,000. (See Statement 6.) The progressive method of making provision for future needs is used in practically every line of business. The Wanaraaker Store and Curtis Building are conspicuous local examples. These enter- prises have developed by progressive steps extending over several decades, each having been built to meet the needs of an established business. Had these magnificent buildings been erected thirty years ago, they would have been so far in advance of the business requirements that financial disaster surelj- must have resulted. 04 If it is sound business to so conduct a private enterprise, the same argument should carry weight in a city experiment such as contemplated. The mere fact that the City finds it absolutely necessary to undertake this transportation enterprise on account of its not being financially attractive to private capital warrants the posi- tion herein assumed that this experiment, if financed on the City's credit, should be made grad- ually and with caution. The mere fact that the City can draw on the taxpayers for the deficit in its interest and sinking fund obligations, while a private company has not that resource, should be no valid argument for a reckless expenditure of the people's money. Nearly every one admits the soundness of the principles underlying the progressive or step program herein proposed. It is only when it is proposed to apply it to his own district or locality that opposition is aroused. This is a psychological and political phase of the problem which it is useless to discuss here. Every man should allow his conscience to decide his position when his personal interests and rights conflict with those of the City. In this connection it may be well to call attention to a matter which has been apparently overlooked by the public; namely, that the "Taylor Plans" have never been officially approved as a whole by Councils and are being constructed on the progressive or step program, so that the program herein outlined is pi-actieally now in effect. About a year ago $6,000,000 was authorized and appropriated for what was popularly understood to be a start upon the Frankford Line and the Broad Street Lines. This initial appropriation of $6,000,000 may be considered as the City's endorsement of a limited plan of rapid transit consisting of two routes only — and not the entire " Taylor Pi-o- gram. " As this sum was only abovit 20 per cent, of the sum estimated as the construction cost of these routes, it is referred to in this report as Step No. 1 of the construction program. This sum of $6,000,000 was borrowed at a 6 per cent, rate for interest and sinking fund, thus drawing $360,000 annually on the tax revenues of the City. It was explained at that time that it was not desirable to borrow more than the sum of $6,000,000, which it was estimated would finance the construction contracts until cheaper funds were availahle, these cheaper funds being money borrowed under the new legislation, which allows the issuance of 50-year bonds with graduated sinking fund and the capitalization of in- terest and sinking fund during construction and first year of operation. The only difference between the "Taylor Plan" and what is here advocated is that the "Taylor Plan" called for about $50,000,000 to finish the comprehensive system in a second step, whereas this plan contemplates an expenditure of about $25,000,000 in the second step, leaving the balance to be carried forward when conditions warrant. Effect of Gradual Construction by Steps on the Lessee of City's System. The question will be raised whether the method of construction herein outlined is not to the financial advantage of the Philadelphia Rapid Transit Company, the assumed lessee of this system. This question cannot be answered either affirmatively or negatively without full knowledge of the terms of the lease. It is the lease which will determine the advantages flow- ing to the lessee — not the construction program. This is further discussed elsewhere. In a joint and unifled method of operation of the surface and rapid transit lines such as 65 is contemplated in this report and in all the former reports of this Department, certain interests of the City and the Philadelphia Rapid Transit Company must he considered as joint. The Company and the City under the terms of the "" Contract of 1907" and the assumed terms of this lease are virtuall.y partners in a city transportation enterprise and it is not logical to assume that an advantage can accrue to one [)artner without a corresponding advantage to the other, according to such terms as the lease shall provide. It has been assumed in all discussions that the Philadelphia Rapid Transit Company will have prior claims upon the joint earnings of the lines to the extent of at least receiving its operating expenses, taxes and the interest on its investment in the new lines and their equi]>- ment and such amount as may be agreed \ipon as a recompense for diverted business in merg- ing its system with the rapid transit lines. Sueh claims should also include any agreed tiuaneial damage resulting from the establishment of a universal transfer, or any fai'e changes which may be authorized in the "1907 Contract." The City will receive its share of the profits only after the allowances to the Company, as agreed upon, are deducted. This assumption is a fundamental feature in the form of lease proposed luider the "Taylor Plans." It will be seen how highly imjiortant it is to operate tiie joint or merged sj'stem as efficiently as possible, which means utilizing the existing system as far as it can be incorporated into the joint operation, and it should I)e self-evident that the Cit.y's assumed liability should be kept as siiiall as po.ssible. Reservation of Space in Broad Street for Through Lines of the Pennsylvania Railroad. The former reports of this Department have referred to the proposed occupancy of a part of the space under Broad Street by the tracks of the Pennsylvania Railroad, in order to pro- vide them with facilities for through-routing some of their local and southern trains. In order to provide for the joint occupation of the street and avoid interference the reser- vation for the Pennsylvania Railroad has been placed on the west side of Broad Street and the tracks of the Broad Street Subway placed on the east side. The construction of both the systeiiLs of tracks at the same time would be an advantage both to the City and to the Pennsylvania Railroad from a financial standpoint, and a great eonvenienee from the standpoint of the public as it would not result in tearing Broad Street up for two different construction periods. The former reports have, in all cases, assumed that any additional expense resulting to the City because of this joint arrangement will eventually be paid by the Pennsylvania Railroad and that such provision will be inserted in any franchise granting the companj' the use of the City's streets. Up to the present time these plans are regarded as tentative and study plans only, worked out with the view of providing for what it is believed will be the future requirements of its system. As this Department is in hearty symjiath}' with all legitimate plans to improve the transportation facilities of the city along lines which seem reasonable and progressive, this Department has arranged the Broad Street Line so as to reserve such space as seems reasonable. Change of City Hall Station. Tlic alignment of the two tracks continuing down Broad Street to Spruce Street should, in my judgment, be modified in the neighborhood of City Hall so as to remove the station from 66 I- UJ UJ a: \- GIRARD TRUST CO. I- u UJ (T t- I SOUTH _ BROAD STREET t- z> z I- U) 111 I u CITY OF PHILADELPHIA DEPARTMENT OF CITY TRANSIT REVISED LOCATION BROAD STREET SUBWAY CITY HALL STATION 20 40 &OFU MARCH 1st, 1916 MAP NO. 6 REVISED LOCATION BROAD STREET SUBWAY CITY HALL STATION MARCH 1st. 1916 MAP NO. 6 iiiKliriR-atli City Hall and place the same on a diagonal line running under the proposed I'laza from Broad Street Station to a point at or near Arch and Broad Streets, thus secur- ing a greater distance between the City Hall Station and the Chestnut-Walnut Street Station, which for the present will form the southern and terminal station on this line. This station, and also the Walnut Street Station, will become 2-track stations instead of 4-traek stations as formerly designed, and recommended by virtue of the Parkway Line being eventually through- routed to North Broad Street via Sixteenth Street and Walnut Street. This will greatly simplify both the construction and operation and will avoid all complicated switching arrange- ments needed for the extreme flexibility of operation which the foriuer "loop" provided in the matter of right-hand and left-hand train operation around the "loop" in addition to the pro- visicm tVir through-routing of the North and South Broad Street Lines. The location of the City Hall Station under the Plaza just north of the City Hall, and diagonally between Broad Street Station of the Pennsylvania Railroad and Broad and Arch Streets, will permit the utilizing of Arch Street surface ears for transfers east and west with much greater facility than the present recommended location and will relieve the pressure and congestion which will result to the Market Street Subway. The location of the station beneath the City Hall was brought about as a result of limita- tions due to track arrangement and three fundamental assumptions: 1. That the Philadelphia Rapid Transit Company will either presently or eventually agree to construct at their expense a 2-track subway east and west vmder City Ilall, thereby operat- ing their trains on a tangent as a substitiite for their present express lines circling the City Hall. 2. That this being done, the iilatform of the Fifteenth Street Station will be extended eastwiird sufficiently to permit of making this stalinu the main transfer ]ii)int between the imrth-aiul-south and east-and-west lines. These items have been estiniiited to cost the (!ompany at least $500,000. 3. That it is essential to connect the Parkway Line into this station in order to include it in the transferring arrangements. with the Broad Street Lines and to give it a proper ter- In my opinion, it will be a fundamental error to make this the main transfer point between the east-and-west and north-and-south lines, since at this point both lines will be carrying their maximum load, and transferring between lines should be done at point of less congestion and where better facilities can be arranged to provide for it. Under these suggested modifications the bulk of the transferring will occur at two points — Eighth and Market Streets and Broad and Walnut Streets. At l)oth these points facili- ties can be provided for taking care of such transferring as may be desirable. A line should be, as far as possible, located and operated so that it will take the people to the principal points in the business district as directly as possible without the use of transfers, and I believe that a study of the plans herewith sui)mitted will make it evident that transferr- ing will be no more, and somewhat less, on this plan than on the plans formeidy proposed. This matter of transfers between rapid transit lines in a unified sj'stem is a vital one, and may be fairly called the controlling one in Philadelphia, and it is only after a careful study and observation of this situation for a number of years that I feel warranted in suggesting a change of this character. 67 My objections to the present location of line and station are: 1. Its extremely high cost. 2. It is not the proper place to make a general transfer between rapid transit lines. 3. The station is too close to the Chestnut Street Station on the south. 4. Liability of damage to the City Hall. 5. There exists no agreement with the Philadelphia Rapid Transit Company in regard to building the Market Street line through the City Hall and extending the Fifteenth Street Station platforms as contemplated. 6. Excessive depth required. 7. All entrances and exits of the stations are either adjacent to, or inside the City Hall, necessitating that all passengers cross the inclosing streets, congested with traffic of all kinds. Tliis is one of the most congested points in the city and this station would increase it by 300 per cent, or more. The reasons in favor of the proposed location north of City Hall are: 1. Much lower cost of construction — fully $500,000 less than the present plan. 2. Better distribution of stations on the line by increasing the distance between the Race Street, City Hall and Chestnut- Walnut Street Stations. (See Map No. 7.) 3. No great risk of damage to the City Hall, at least much less than by the other plan. 4. Platforms much nearer the street surface — about 7 feet. 5. Much better light and air than if placed underneath a building. Station will not be obstructed with heavy wall and underpinning columns. 6. Allows the utilization of the Arch Street surface line to relieve the Market Street Line. 7. Allows for such amoiuit of transferring as may be deemed necessary to provide at this station. 8. Permits of sub-surface connections under streets, making less congestion on surface than otherwise. Change of Existing Contract for City Hall Station. The work so far done by the contractor for tlie City Hall Station consists largely of pre- paratory and iirelimiiuiry work, the sinking of sumps for drainage and the excavation of the material down to approximately the level of the City Hall foundations. No masonry or permanent work on the station has been placed, and the excavated material can be readily replaced out of the new work and the City Hall restored to its former condition ^vithout great delay or expense. Up to date $79,775.47 has been paid the contractor on account of this contract, and the final figures as to the total additional amount required in making the change cannot be com- puted for some little time. The contract under which this work is being done provides as follows: "Changes. — Should tlie Director change the design of any portion of the work or the requirements of the specifications, the contractor shall conform to such change. If such G8 alteration shall increase the cost of the work to the contractor, the increase will be added to the contract price to be paid by the City, and if the cost be diminished the amount of such diminution will be deducted from the contract price. If the alteration should be merely an increase or decrease in quantities of structure or work for which unit prices are bid and provided in the contract, the contract price for Item 1 will be increased or diminished by the difference in quantities at the respective unit prices. Should the change involve work or material of a class for which the contract does not contain a price the increase or diminu- tion of expense will be estimated by the Chief Engineer and shall be subject to agreement between the Director and the contractor before proceeding with the changed work, or at the discretion of the Director the work may be required to be done under the force account item of the contract. No loss of prospective profit on portions of work cancelled will be estimated to the contractor. Any change to be made at an increased cost may, at the op- tion of the Director, be executed under a separate contract therefor, the work under this contract being suspended, if necessary, until said changes are completed. The contractor shall give every facility for making suclv changes and will not be allowed compensation for delay, but during any delay that may result the charge for inspection and supervision will be suspended." Under this clause the Department appears to have full authority to make such changes as are recommended in this report and to adjust the contract on a fair and equitable basis, such adjustment being, of course, subject to the approval of the Mayor and the City Solicitor. If the approval of the alteration be obtained promptly, work can start vigorously and this contract completed ahead of the remaining section of the Broad Street Line, so that any delay resulting from this change should not affect the date of opening of the Broad Street Line. 69 uuu uu u uaau ^^^^Shi£/ JUUUU /iPJl//^ pSCUff w uy uu uu uu uiuu uu uuu uu u DDDODQDDnaDD DCZiDDlJnnlJ /^-V^/CiT/ i CI X 3> 9 3 c JO ■a n O c J o X W C o (0 w 4-1 V 4) (0 3 C ♦J «0 V CD (Q ID = (/) ™ h > 111 ♦; uj b QC ^- CO S < " o % DC OC DQ >»- o c o 3 n c I o £ (0 MAP NO. 7 -►smdans-* SlIDUld FINANCIAL OPERATING STATISTICS lu the 1015 Report of this Department fifteen sets of- slatcmeuts are gi\eu, showing the results estimated to be obtained by operating the different lines there recommended under a lease by the Philadelphia Rapid Transit Company, and an alternate plan assuming the lines leased by an independent operator. The assumed forms of lease are there stated. A study of these statements shows that in all cases the City will have to shoulder a heavy annual deficit in its interest and sinking fund payments over a long period of years, because the City's share of the net earnings of the lines will be far short of the amount for which the City mast obligate itself. For the latest plan (complete system) the deficit for the year 1921 is estimated to be over $2,000,000; by the year 1930 the total of the ten .years' deficits will have amounted to over .•t;20.000,000, and by 1910 to over ,+;50,000,000. (See Statement G.) These figures assume that the Camden Tube will be in operation by the Pliiladelphia Rapid Transit Company, and the entire net earnings of the Camden Tube have been applied as a credit; otherwise the City's deficits would I)e considerably larger. (See Statement 5 and Diagram No. 7.) In order to make a just and proper comparison of the results of operation of the lines sug- gested herein, with the above results of operation of all tlu^ lines i-ecomniended in the 1915 re- port, the same terms of lease are assumed to apply, and the calculations show a deficit in 1921- — the maximum — of $815,000, reducing year by year as traffic increases and becoming a surplus or profit in 1931, the total of the deficits in the preceding ten years amounting to $4,200,000. This statement shows clearly the great benefit to the City in constructing the rapid transit lines in successive steps and operating them to the fullest advantage in connection with the sur- face lines. Assuming that all the money necessary for the construction of the rapid transit system has been raised either by the former plans or by the plan recommended in this report, and the system constructed is ready for operation, what financial results from this operation may be expected? Results in comfort and convenience are well understood by the general public, and need nut be discussed here. During the past throe years this Department has estimated the operating results on many different combinations of lines, and many different methods of operation. The following statement is taken from the 1915 Report of this Department, and shows the situation in regard to operating results: "ESTIMATED FINANCIAL RESULTS OF OPERATION UNDER VARIOUS PLANS OP CONSTRUCTION AND LEASE." "As various plans of construction and lease have been discussed and developed, estimates of the traffic, service and financial results of each to the City and op(>ratiug company have been prepared in complete detail. "The principal of the various plans under consideration during the past year are as fol- lows: 71 Plan No. 1. System recommended. . . P. R. T. Co. Operator Under terms of Program. 2. System recommended. . .Independent Operator No transfers with P. R. T. Co. Frank- ford not connected with Market. 3. System recommended ... Independent Operator. .. .Transfers with P. R. T. Co. Under assumed joint rate agreement. Frankford not connected with Mar- ket. 4. System authorized P. R. T. Co. Operator Under terms of Program. 5. System authorized Independent Operator. . . .No transfers with P. R. T. Co. Frank- ford not connected with Market. 6. System authorized Independent Operator. .. .Transfers with P. R. T. Co. Under assumed joint rate agreement. Frankford through-routed with Market. 7. System authorized Independent Operator. . . .No transfers with P. R. T. Co. Frank- ford through-routed with Market imder assumed rental. 8. Same as Plan No. 4, but including Delivery Loop. 9. Same as Plan No. 5, but including Delivery Loop. 10. Same as Plan No. 6, but including Delivery Loop. 11. Same as Plan No. 7, but including Delivery Loop. 12. Broad Street Line as authorized, Independent Operator. No transfer with P. R. T. Co. 13. Same as Plan No. 12, but including Delivery Loop. 14. System authorized, P. R. T. Co. Operator. Under modifications of Program. 15. Same as Plan No. 14, but including Delivery Loop and Woodland Avenue Line. 16. Same as Plan No. 15, but including Northwest Line. "Plans Nos. 1, 2 and 3 embrace the system recommended by the Department of City Transit in its Special Report to Councils on February 11, 1915, made in accordance with a reso- lution of Councils on February 4, 1915. "Plans Nos. 4, 5, 6 and 7 refer to the system authorized by Councils June 30, 1915, under various conditions of lease. "Plans Nos. 8, 9, 10 and 11 embrace the system as authorized by Councils, but including the Delivery Loop. These plans are given because of the conviction that the Delivery Loop must necessarily be built as a part of the Broad Street Line. "Plans Nos. 12 and 13 give the estimated results for the Broad Street Line alone. "The estimates embraced in Plans Nos. 4 to 13 inclusive were used in the application to the Public Service Commission for the Certificate of Public Convenience required under the Public Service Company Act. "In all the above plans of operation by tiie Philadelphia Rapid Transit Company the terms of the 'Co-operative Program for Rapid Transit Dovelopment with Universal Free Transfers' are assumed to apply. This Program was published in full in the Annual Report of the Department for 1914, and appears on Statement No. 1 of this report. 72 I "In the plans involving operation by a company independent of the Philadelphia Rapid Transit Company it is assumed that tlie operating company will be allowed 6 per cent, on its investment and that the balance of the net income would be divided between City and Com- pany in proportion to their relative investments. As the security will be good, the Company could probably borrow money on a 5 per cent, basis, in which case from this source alone it will have for its profit, expenses, hazard and operating service, an amount equal to 1 per cent, on the cost of equipment. "Plans Nos. 14, 15 and 16 contemplate operation by the Philadelphia Rapid Transit Com- pany under a modification of the aforesaid Program as discussed in a previous section of this report. "The estimated cost of construction and equipment given for each plan includes interest during construction and the necessary real estate or easements. The estimated cost of equip- ment covers that equipment required at the beginning, of operation. The investment in equip- ment will increase from year to year as required by the growth of the trafSc. "Since the preparation of the estimates of cost of construction a contract has been let for the City Hall Section of the Broad Street Subway at a price fully ten per cent, under the estimates, and for a large part of the Prankford Elevated Line at a saving of about twenty- three per cent. Although conditions at the time were unusually favorable for the letting of such contracts, it is believed that the actual cost of construction throughout will be less than the estimates." The fact that it was necessary to estimate so many different ways of operating and making so many difi'erent combinations of lines, shows how hazy, indefinite and uncertain are the financial results of the enterprise upon which the City is to embark. It sliows conclusively that the operating results cannot be ascertained in advance of certain knowledge as to terms and conditions of the lease, and by whom the system will be operated. Under all sixteen of the plans shown there results a deficit from operation. The size of this annual deficit and the period of years over which it continues vary with the different assump- tions as to the operator, lines involved, and terms of lease. It is not necessary in this report to go into the details of these sixteen plans. A tabula- tion is given on page 28, showing the summary of results on three different assumptions as to operation, but all providing for unified operation. These figures present the only argument necessary to support the position which I wish to urge as one of the features of this report ; namely, that the operator and form of lease should be settled as promptly as possible and in advance of any large amount of construction. I am satisfied that the negotiation of this lease will be long and difficult, for while the City and the lessee may agree on the fundamentals it will be hard to negotiate a lease which will be satisfactory from a business standpoint and at the same time prove satisfactory to City Councils, on account of the pressure which may be brought to bear on representatives of local districts in Councils for extensions which connot be justified and which the lessee cannot as- sume. The limit to which the City can go in developing this enterprise is the loss of its total bond interest and sinking fund charges and although the lessee may agree to the lines author- ized at the time of the lease, protection will be insisted upon which will limit the demand for future extensions before they are justified. Boston early recognized the true function of rapid transit lines in a unified system in supplementing the surface car service. Their elevated line has from the first been operated between one transferring terminal at Sullivan Square in Charlestown and one at Dudley Street on the opposite side of the city, 73 the trains being through-routed across the business district. At each terminal large transfer- ring accommodations have been provided and the transfer between systems is quick and con- venient. These teriiiinals are but 43 miles apart, as the Boston situation permits a different focusing of surface lines from that of Philadelpliia. After eight years of operation between the original terminals the territory served has grown sufficiently to warrant the extension of the i-apid transit line from CharlestowTi on the north end to Everett, and from Dudley Street on the south end to Forest Hills, the original terminals being still retained in service. Surely fifteen years of successful operation of such a combination ought to prove its adaptability to similar Philadelphia conditions. The Boston development ju.st described was made by the Company in order to satisfac- torily and economically meet conditions that closely resemble those above Erie Avenue. The following quotation from the last report to the Board of Directors of the Boston Ele- vated Railway Company, referring to the load which that company has been practically forced to assume by the construction of rapid transit lines in the city of Boston, may be taken as an index of the Company's attitude toward such lines: "If any stockholder should be disposed to criticise the management for allowing the Company to increase its capital investment so rapidly or for assuming the burdens of addi- tional subways as rapidly as it has done, you must remember that what has been assumed by the Company is only a small part of what has been demanded by the public, that tre- mendous pressure is being constantly exerted both before the Legislature and the other public authorities to compel the Company to incur additional capital expenditures and to assume the burden of additional subways, and that even in view of what has been done people who are interested in special projects, many of them involving large expense, con- demn the Company in unmeasured terms for its refusal to assume additional obligations which in view of the foregoing it ought not to assume. "Your Directors are firmly convinced that it is absolutely essential that in the near future some adequate provision should be made for a substantial increase in the net reve- nue of the Company. In their judgment no adequate relief is to be expected either from the ordinary increase in the business, in a reduction of operating expenses or in any de- crease in the charges ordinarily incident to the capital investment." Tliere is this difference between the Boston situation and the situation in Philadelphia. The Boston lines are really under-capitalized, while the Philadelphia Lines are over-capital- ized, making the Philadelphia Lines less able in their present condition to carry the burdens which these lines impose. In negotiating this lease the City and the lessee will each have to con- sider the practical limitations involved, and each must try to recognize that his standpoint is not the only one from which this undertaking must be viewed. Up to this time there has been no suggestion on the part of anyone to place any of the burden upon the ones benefited, namely, the riders. All propositions and suggestions so far submitted indicate that fares will be reduced under this plan of lease by means of the elimina- tion of the 8-cent exchanges, and the suggestion has been made to reimburse the Company out of proceeds of taxes. This is only another means of transferring the burden from parties bene- fited to other parties for no reason other than political. It is not sound as an economic measure. Sound economics dictate that for a period of years, until the system no longer requires it, the fare per journey should be raised sufficiently to provide revenue with which to meet the City's charges. The exti'a charge may be readjusted wlien the earnings of the system reach a point where the fare can be reduced. Such increase of fare, however, is only suggested as a temporary expedient. 74 FINANCIAL CONSEQUENCES OF OPERATING DEFICITS Probable Effect of the Transit Program on City Taxes. The tables accompanying the 1915 Rei)()rt showing the estimated deficits in interest and sink- ing fnnd charges against the City were calcnlated on the assnmption that the proceeds of the one mill personal property tax made available nnder recent legislation will be nscd wholly to lighten the burden of these fixed charges resulting from the construction of the City-built rapid transit lines. Actually this extra revenue is now merged into the City's income, and as the law does not specifically devote it to rapid transit purposes it should not (in stating the actual City deficits) be considered as an offset to the deficit in the fixed charges. The comparative ligures (see Statements 5 and (i) do not include this tax as a credit to the operation of the lines. It seems probable now that the deficit shown must be paid annually to the Sinking Fund Commissioners out of the general tax revenues of the City. This will probably necessitate an increase in the tax rate cm real estate anumnting to 4 or 5 cents per hundred dresent case probably rests upon the following assumptions : (a) That in the real estate tax the o^^•ner will carry the burden — not the tenant. (b) That a 5-ceut fare is all that it is expedient to charge the car rider for a single trip on a unified transportation system. (c) That any increase of carfare must be made uniform over the unified system. (d) That a imiform increase in fare would directly affect the entire population of the city while an increase in real estate taxes would directly afi'ect only about one-quarter of the inhabitants of the city. (e) That an indirect tax on real estate to meet the deficit is preferable to a direct per- sonal tax in the shape of increased fare. Considering these assumptions in the order given, it may be stated that the assumption that the owner of the real estate pays the taxes will be recognized as a fallacy when it is under- stood that every piece of property is occupied by a tenant. The fact that the o^vner may be the tenant does not alter the fact that he is a tenant nevertheless, and his rent consists of the sum of three items, (a) interest on the value of his property, (b) taxes, and (c) repairs and maintenance. Any increase in taxes on the property, while he pays it as an o\^Tier, he also pays it as a tenant. In a rented property the increase of taxes is added to the rent wherever pos- sible. "When, owing to economic conditions, this is not possible it is reflected in a fall in the value of the real estate affected. Since with this explanation, all residents of the city are ten- ants, it is readily seen that it is largely a matter of expediency whether the burden be dis- tributed as an indirect tax over the real estate of the City or by a direct personal tax in the shape of adjusted carfare. The assumption that a 5-cent fare is all that it is expedient to charge for a single journey on the unified system would give the impression that the average fare on the present system is 5 cents only. As a matter of fact for the last six years the average fare per journey has been 76 5.176^, and for the year 1915 was 5.166^, this increase above 5 cents being occasioned by the additional revenue from the 8-eent exchange tickets (Statement 9). I have observed the attitude of the public in the last two years on this question of fares and believe that the opposition of the public to the exchange tickets, and the demand for uniform 5-cent fare, result more from the feeling of injustice connected with the situation than from the money which is involved. Statis- tics show tliat only al)Out 6 per cent, of the riders use these exchange tickets and the irritation which they create is out of all proportion to the number of people affected. It is the injustice of the situation by which free transfers are available at certain points while at other points, equally or more deserving, 3 cents additional is charged. It is this unjust discrimination which creates the irritation. In the unification of the system, for which the lease of the new lines should provide, tliis source of irritation .should be eliminated. Elsewhere in this report the question of adjustment of car fares has been discussed and Dia- gram No. 6 is included showing that, assuming the unified system be in operation in 1921 as per Plan No. 16 of the 1915 Annual Report of this Department, the increase of the average pas- senger fare per trip to about 5.59^ per passenger should carry all charges involved in a de- velopment of the unified system, protect the existing system to an equitable degree as outlined in the assumed lease, and relieve the City Treasury from any drain — in other words make the unified system self-supporting. If the Frankford Line to Bridge Street and the trunk section of the Broad Street Line (being what is elsewhere referred to as Steps Nos. 1 and 2 of the Comprehensive System) be constructed and in operation by 1920, it is very probable that the increase in the average fare required to provide for the City's investment will be very much less than if the comprehensive system be built. Depending entirely upon the terms under which the system is leased the average fare prob- ably required will be about 5.30 cents. If such adjustment be made, the public should understand in advance that this increase is not for the benefit of the existing Company but it is a direct tax laid upon the system by the City in accordance with the terms of the Contract of 1907, and all revenue in excess of the present fare .should be collected by the Company and paid directly into the City Treasury as a part of the City's income. There is ample precedent for this method of financing the operat- ing deficits as a similar plan has been in use for many years in Boston in connection with the East Boston Tunnel under Boston Harbor. In this ease the Boston Elevated Railroad collects 6 cents per passenger per trip in either direction, and one cent of this is paid into the City Treasury to carry the interest and sinking fund charges upon the cost of the tunnel. It is identical in principle with what the City is now doing in connection with its own gas works. The United Gas Improvement Company collects from the customers $1.00 per thousand feet of gas, turning into the City Treasury quarterly 20 per cent, of their gross collections as rental for use of the City's plant. In order to reach the average fare stated above (should it be decided that an increase of the average fare be made in order to meet these deficits), there seems to be no logical reason why the fare should be uniform as between the two systems. The fare on the surface system might properly be left at 5 cents, and the fare on the rapid transit lines be made of sufficient amount so that the average fare resulting would be the figure necessary to carry the entire proposition. This method would have the further advantage of requiring the lines in the City's system to more directly earn the money required to carry the new investment in such lines, and it would further have the advantage of placing the burden upon those people who are more 6 77 directly benefited and who are able to avail themselves of the advantages of the new lines. Proper arrangements for transferring can undunbtedly be devised, and elsewhere a tentative suggestion for such arrangement is made for discussion only. In all cases it should be evident that eventually the ultimate consumer — in this case the citizen — must pay the resulting tax, and he alone must decide in which shape he prefer.* to have it levied. The City cannot default on its interest. What Adjustment of Carfare Would be Necessary to Make the Unified System Self -Supporting? Attached to this report is a diagram giving the average fare which the present company has collected for a single journey since the year 1900, and this diagram has been projected into the future, using the a,ssumed income, operating expenses, passengers and other data used in the estimation of the result.s shown in the 1915 Kepjrt of this Department. (See Diagram No. 6.) Assuming that the comprehensive system recommended in the 1915 Report had been in operation in 1915 on a uniform fare with universal transfers, all as contemplated under the last suggestions as to lease, and assuming that no increase of passengers would have resulted from the use of these new lines, the average fare necessary to produce the revenue probably would have been 7.01^. This would have permitted a return of 3 per cent, only on the Philadelphia Rapid Transit Company stock. The operating expenses were assumed at 70 per cent., about the same as those of Boston for the same year. The year 1915 being a year of low earnings makes the operating percentage particulai'ly high. (See Statement 10.) The following statements show what fare will be required under different assumptions to produce sufficient revenue to make the system self-supporting, and the diagram attached shows, on the basis of the assumed terms of the lease and assumed income and passengers carried, what fare will be required over a period of years in order to meet the requirements of the uni- fied system. (See Statements 10, 11 and 12 and Diagram No. 6.) This brings out some of the difficulties mentioned earlier in the report, and shows how it may be possible to readjust the fare at stated intervals, as in the case of the gas lease, or at the City's option, whenever the annual surplus earnings reach certain amounts. These are matters to be provided for in any lease of the system, and show one of the many difficulties for which provision must be made in a contract running over a 50-year period. This also clearly shows that should a fare adjustment be determined upon it might become de- sirable to introduce some form of ticket system such as "7 tickets for 40 cents" with possibly an adjustment later of "9 tickets for 50 cents." Diagram No. 6 clearly shows that before the expiration of the lease the ideal aimed at may be realized and the 5-cent fare with universal transfers on the unified system may be attained. To accomplish this, however, it will require that the .system be extended as a business proposi- tion and not be subject to unreasonable sectional demands or made the football of politics. 78 3avj in 39Va3AV •^ o z < DC < .9 01 in o m o u in z < IT 1- D. < I a J 13- < J I a. in d: < >- ■ (n o 3a\^J lO 39Va3Al^ ^' m . o o 1 o &< ^i CO 1*1 Q o o o o % Q O o O 02 < o < &^ o '^ o o Q W P P P o "A I— ( o ;^ dg, OJ • a> C3 a e^T-( tM(MC0-^lO'X>t--00 JIJIJJJIJIJIJIJIJIJI 'Tfilfi vi"^! 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(A Memorandum Addressed to the Board of Estimate and Apportionment and The Public Service Commission of Neiu York City hy The City Club of New York, October 2, 190 S.) "For many years the city has deemed it just to assess upon abutting property the cost of opening streets and building sewers. The theory of such a tax upon property is that it receives almost the exclusive benefit from the construction of a street or sewer adjacent to it. The question naturally arises, does not a transit line, by the benefit that it confers, fall in the same class as new streets and sewers? If a street railroad or rapid transit line be extended into an undeveloped territory, is it not built primarily for the purpose of furnishing transit facilities to future residents in that section? People will buy this property primarily because it has good transit facilities and the value placed upon it is largely based upon its accessibility. This BEING TRUE AND UNIVERSALLY ADMITTED, WHY SHOULD NOT THE PROPERTY THUS ENHANCED IN VALUE BY' THE EXTENSION TO IT OP A TRANSIT LINE PAY' FOR THE CONSTRUCTION OF SUCH LINE, TO THE EXTENT THAT THE INCREASED VALUE WARRANTS IT, INSTEAD OP RECEIVING SUCH INCREASED VALUE AS A PRESENT PROM THE CITY. This principle, in a modified and unofficial form, is oper- ated in Berlin. The assessment is not collected by the city, but the street car company when extending a line to outlying territory requires the owners of the property benefited to guar- antee to the company a certain return upon the cost of such extension. "To throw light upon the above question, the City Club has been making some painstak- ing investigations, extending over several months, of the rise in value of land along the present subway. The method of arriving at these values was as follows: Assessment values, as given by the Department of Taxes and Assessments, were taken for the year of 1900 on vacant lots on a basis of 60 per cent, of full value for the district from 79th Street to the Spuyten Duyvil ; 65 per cent, between Central Park and Harlem River, and 60 per cent, in the Bronx. These were compared with the assessment values of 1907 on a 90 per cent, basis for all these districts, and in each case the full value was obtained by raising the assessment figures to 100 per cent. In the districts which were largely built up all vacant lots were listed. Where there were few buildings, as in the extreme northern portion of Manhattan, a sufficient number of such lots were taken to show the general land values, and from these was figured the total value for this district. To ascertain the proportion of the increase in land value attributable to the building of the subway, it was necessary to deduct from the total rise what might be termed a normal rise, or the increase that would have taken place through the natural growth of the city with- out the added stimulus of a new transit line. The only basis of arriving at a judgment of what such a normal rise probably was is to ascertain the rise for a period of equal length under normal conditions. Accordingly the increase in value of the same land during the preceding seven years from 1893 to 1900 was determined. It was found that values rose during this 87 period of seven years on an average of about 50 per cent, in tlie district on the west side below 135tli Street, and on an average of about 43 per cent, from this point northward to the Spuy- ten Duyvil. These percentages, then, may be taken in these districts as the best basis ascertain- able for a judgment as to the normal rise for a period of this length, and if subtracted from the rise which took place along the subway from 1000 to 1907, should indicate the effect of the subway on land values during the latter period. "By applying this method it was discovered that the land from 79th up to 110th Street and between Central Park and North River had increased on an average about 45 per cent., which is about the expected normal rise. In the district along the Lenox Avenue line south of the Harlem River the average increase was about 43 per cent., which would indicate that land had not increased in value due to 'the building of tie subway. The explanation of this un- expected condition is no doubt that an elevate! road already existed which gave fair service to these districts, so that the additional facilities had little effect on land value, except in the immediate vicinity of subway stations. "The rise in land value along the Broadway branch from 110th to 129th Street was much more noticeable, averaging about 70 per cent., but the locating of Columbia University at this point affected values to an extent that makes it quite impossible to arrive at any reliable con- clu.sions as to the proportion of rise that should be attributed to the subway. "The situation from 135th Street northward, however, is entirely different. Between 135th Street, 155th Street, Convent Avenue and North River the land increased in value between 1900 and 1907 about $17,825,000. Although the elevated road paralleled this district, yet ow- ing to the topography the road was of little service, so the subway added very materially to the transit facilities of the locality. "The district between the Harlem and North Rivers from 155th to 178th Street increased in value about $22,450,000; from 178th to Dyckman Street the increase was about $15,925,000; from Dyckman Street to the Spuyten Duyvil the increase was about $13,100,000. The aggre- gate rise in this land from 135th Street to Spuyten Duyvil was about $69,300,000. If an esti- mated normal rise of $20,100,000, based upon the rise of the previous seven years, be sub- tracted from this, it leaves a rise of about $49,200,000, apparently due to the building of the subway, which is 104 per cent, increase on the value of 1900. "Tlie rise in land values of The Bronx is likewise very noticeable. Taking a district along the subway extending in width about a half mile on either side, the increase in land values was somewhat as follows : From the Harlem River to Willis and Third Avenues the rise was about $9,200,000; from that point to Prospect Avenue, about .$22,100,000; from the latter point to Bronx Park, about $13,500,000. The aggregate rise in land values for this district from the Harlem River to the Bronx Park was about $44,800,000. Subtracting from this an aggregate normal rise of $13,500,000, it leaves an increase of $31,300,000, due to the building of the subway. "Since this property has been so enhanced in value by the building of the subway by the city, could it not have contributed largely toward the expense of constructing the line and yet have reaped a good increase in addition to such assessment ? As previoiisly stated, the aggre- gate rise in land value above 135th Street in Manhattan caused by the subway was $49,200,000. The cost of building the subway from this point to 230th Street was $7,375,000, or but 15 per cent, of the actual rise caused by the new line. The property owners could have paid tlie en- tire cost of this portion of the line and yet have had a net profit on their land of 89 per cent., or an aggregate of $41,825,000 for the district. "In The Bronx the situation was in most respects similar. The aggregate increase in land value (of a district extending about a half mile either side of the subway), due to the 38 building of the subway, and in excess of a normal rise of $13,500,000, was about $31,300,000. The cost of the line from 143d Street to Bronx Park was about $5,700,000. Had the property which was benefited borne this expense through the form of an assessment, after paying such assessment, there would have remained an aggregate profit of $25,600,000 in excess of the nor- mal rise in value since 1900. This would be a profit of 77 per cent, on that property caused by the increased transit facilities of the subway. "It will be noted that the aggregate rise in land value in Manhattan from 135th Street to the Spuyten Duyvil, and in The Bronx, due to the building of the subway, was $80,500,000. The cost of the entire subway from the Battery to the Spuyten Duyvil and the West Farms branch to Bronx Park was but $43,000,000. The property benefited, in the districts above noted, could have paid this entire cost, and yet have had a net profit, due solely to its construction and oper- ation, of over $37,500,000. Had it paid only for the portion running through its own territory, there would have remained a profit of over $67,425,000. In view of this fact, would it not be reasonable to require property benefited in outlying districts to pay for the cost of a rapid transit line built to serve it? "The data gathered from the influence on land values of the existing subway may be applied to provisional rapid transit lines. Its application to the Fourth Avenue line in Brook- lyn, contracts for which are under consideration, would indicate that the land along this pro- posed line might not greatly rise in value, owing to the fact that it parallels, at a distance of one block, an existing rapid transit line. This assumption is based upon the fact that the building of the subway affected but very little the value of land west and north of Central Park, owing to the proximity of an elevated road which gave reasonably good service. The possibilities of an assessment plan may be best brought out by projecting a provisional line through territory largely unoccupied, having at present no rapid transit facilities. The pro- posed extension of a rapid transit line through Jerome Avenue in The Bronx, if built as a reinforced concrete elevated structure, in order to make it noiseless, could be constructed for about $2,550,000, and, judging by the effect on land values caused by the existing subway in The Bronx, where the conditions were very similar, neither territory being within easy reach of a rapid transit line, such a new line would increa.se land values in the Jerome Avenue dis- trict fully $41,550,000. If the property holders were to pay for the cost of this new line, after having paid such assessment, they would still have a profit of 90 per cent, on their land as valued in 1907. "If, on the completion of the Blackwell's Island Bridge, an elevated road were to be con- structed of reinforced concrete, to connect with it and to extend out Jackson Avenue to Flush- ing, with a branch leaving this main line at DeBevoise Avenue, and following that avenue to the vicinity of Berrians Island, such line would be aljout 9 miles long and woiild cost about $4,500,000. It would serve approximately 9 scjuare miles of largely unoccupied territory, the aggregate value of which at present is not less than $57,480,000. On the basis of the rise in value caused by the subway line in The Bronx, the aggregate rise of this land in Queens would be $54,600,000. In other words, the landholders in this district could afford to pay for such new rapid transit line and yet enjoy an aggregate profit of $50,100,000, or a profit of 87 per cent, upon the present value of their land. "This plan would largely solve the problem that confronts the public service com- mission IN attempting to decide between factions, each contending for a line in its par- ticular section. The sincerity of speculators and real estate venturers would quickly BE tested by the REQUIREMENT THAT THEIR PETITIONS BE ACCOMPANIED BY AN ASSURANCE OF A WILLINGNESS TO BE ASSESSED FOR THE COST OF THE DESIRED LINE. 89 "Since territory now served by a rapid transit line does not greatly rise in value due to an additional rapid transit line, it would probably be unjust to assess property adjacent to a new line in such districts. That is, a subway extending from the lower part of Manhattan to the Harlem River, or extending eastward under the East River and through the congested portions of Brooklyn could not justly be assessed wholly upon adjacent property. Such portions op nevp SUBWAYS, IP BUILT BY THE CITY, WOULD PROBABLY HAVE TO BE PAID POR WHOLLY OR IN PART AT LEAST BY GENERAL TAXATION. It is Very evident that property in the vicinity of a rapid transit line does not benefit equally; unsettled outlying territories would benefit most; territory in the vicinity of express stations would rise in value more than that adjacent to local stations. There are many conditioning factors to be considered in any attempt to lay an assessment upon property for the building of rapid transit lines. These factors, however, are approximately as- certainable, and any judicious commission would be in a position to secure the facts as con- nected with the present subway, and, through them, would be able to lay an equitable assess- ment upon land according to the prospective benefit that it would secure. The legislative ac- tion CONPERRING on the city the power needed to carry out this plan and providing POR a better system OF assessment and land condemnation could, no doubt, eashjY be passed." 90 APPENDIX B PAYING THE BILLS FOR CITY PLANNING. (Extracts from a Paper Presented by Nelson P. Lewis, Chief Engineer of the Board of Estimate and. Apportionment of New York City, at the Fourth National Conference on City Planning, held in Boston, Massachusetts, May 27 to 29, 1912.) "* * * The question of how the bills are to be paid is not only a pertinent but a necessary- one and cannot be avoided. To provide for a city of one hundred thousand, with no apparent reason for exceptional growth, an ambitious scheme suited to a metropolis of several millions is to invite disaster; while to limit the plan of a large and rapidly growing city occupying a strategic position to one suited to its present size will seriously retard its future orderly develop- ment and may prevent it from realizing the growth and importance of which its natural ad- vantages appear to give promise. "The feeling is common and not vmnatural that if we are planning more for the future than the present, coming generations which will reap the benefit should bear the greater part of the burden. It seems easy to pay with borrowed money, particularly when the money can be borrowed for fifty years, or the span of two generations. The habit of paying in this way is easily acquired and is broken with difficulty. "When anything is paid for with money bor- rowed for a period longer than the possible or even probable life of the article purchased, the city's credit is improperly used. A corporation which pays for its betterments from earnings is on a sound basis. When large earnings are used to pay excessive dividends, and betterments and renewals are paid from borrowed money representing /Jidditional obligations, there is danger. "When interest on existing debt is paid from funds raised by incurring more debt, disaster is imminent. The only source of revenue of the American city is its power to tax. Its credit is due to this same power plus the value of its own property. The larger the city's debt which has been incurred for projects which are not self-sustaining, the greater will be the demands upon its taxing power to meet interest and sinking fund charges due to such debt, and the less will be its ability to undertake new improvements and at the same time meet the enormous running expense of the modern city. It might not be a forced comparison to say that the ordinary services which the city renders to the public through its administrative de- partments, the expenses of which are met by the regular tax levy, are the dividends which it pays to its stockholders, while for its betterments it must issue bonds or levy special assessments. Every bond issue requires an increase in the tax levy for a term of years in order to meet in- terest and amortization charges, curtailing by just so much the amount which can be expended upon municipal housekeeping expenses. In order to keep the tax rate within reasonable limits, expenses which should properly be met from the tax levy are often paid with borrowed money. Is not the city which adopts this policy actually doing the same thing as the business corpo- ration which incurs additional debt in order to pay dividends? * * * 91 "In the more fundamental work of city planning, wjiere unoccupied territory is being de- veloped, the property will not have been assessed for improvements, and consequently the cost of the acquisition and construction of new streets can properly be assessed upon the adjoining property according to benefit, such benefit representing the entire cost in the case of local streets and a portion of the cost in the ease of thoroughfares of metropolitan importance. One PRINCIPLE SHOULD BE INVARIABLY RECOGNIZED, NAMELY, WHERE THERE IS LOCAL BENEFIT THERE SHOULD BE LOCAL ASSESSMENT. There Can be no improvement which has been intelligently planned and executed which will not result in some local benefit, and it follows that there should always be some local assessment. No improvement, however small or however large, will be of equal benefit to the entire city, and to distribute the burden of paying for it over the whole city ac- cording to taxable values is unfair in that it is not placed according to benefit. The owners of property in the immediate vicinity are frequently enriched at the expense of those whose holdings are entirely outside the district dii'ectly affected. "Perhaps this statement should be so qualified as to exclude certain great improvements such as public buildings, bridges, docks, and rapid transit lines, and yet there is doubtless a local benefit resulting from these. It may be urged that such things are not included in what is commonly called city planning. If so, the definition of city planning needs revision, for tliey are certainly most essential parts of any city plan. The City Club of New York several years ago showed that as a result of the building of the first Rapid Transit Subway in New York the actual land values in those portions of upper Manhattan and The Bronx which were most directly affected were witliin seven years increased $80,500,000 above the normal increase for that period. The cost of that part of the subway passing through the districts where this rise in values took place was about .$13,000,000, while the cost of the entire subway from the Bat- tery north was .$43,000,000. It is quite evident that if the $13,000,000 which was spent up&n that part of the subwaj"^ traversing the district so notably benefited had been assessed directly upon the property, its owners would still have netted a neat profit of some $67,500,000, while had the cost of the entire subway been assessed upon the same limited district, the net profit to the land owners would have been $37,500,000. "Was it quite fair that property in distant parts of the city, entirely unaffected by this great project, should bear the same proportion of the burden as that which was so conspicuously advantaged? It is true that this improvement is entirely self-supporting, interest and amortization charges being provided from the rental paid by the operating company; but the local benefit w^as so clearly est^vblished that THE RAPID TRANSIT LAW WAS SO AMENDED AS TO PERMIT THE ASSESSMENT OP ANY P.VRT OP THE cost of future subways. many new SUBWAYS ARE NOW BEING PLANNED, AND SOME ARE BEING BUILT, BUT IT IS DOUBTFUL IP ANY OF THEM WILL BE SELF-SUPPORTING FOR YEARS, THE ROUTE FURNISHING THE MOST INTENSIVE TRAFFIC HAVING BEEN FOLLOWED BY THE LINE FIRST BUILT. * * * "It needs no extended argument to prove the equity and wisdom of local assessment wher- ever there is local benefit. That it has been done to such a limited extent in the past is no reason why it should not be more generally done in the future. That certain pi-operty o^v^lers have heretofore be-n treated with such prodigal liberality is no good reason why others should fatten through a continuation of an irrational and essentially unfair policy. To the degree that the assessment plan is adopted, to that same degree will tlie city jilace itself upon a cash rather than upon a credit basis. It may be urged that the adoption of such a policy would discourage the agitation for and execution of many desirable city planning projects, tliat American cities have been slow to appreciate the advantages of intelligent city planning, and now that there has been a marked awakening it would he unwise to suggest the adoption of a policy which might dampen this new-born enthusiasm. A desire for something which involves no direct cost is not 92 a sign of intelligent interest. "We are learning that the improvement of our cities pays. That is a hopefnl sign. If we have simply reached the stage where we want better conditions only if someone else is to pay the bills, the hope has not a very substantial basis. If we want them badly enough to pay for them ourselves in proportion to the benefit we feel sure will follow, we are making- real progress. * * * "While a few cities may now have statutory authority to carry out the policy which is out- lined in the above paper, most of them lack such power. The following is suggested as an act which, with sucli modification as local conditions and existing laws may require, would accom- plish the purpose : "In all cases where an administrative board is authorized to determine that an improve- ment is to be made, the said board shall also determine what proportion of the cost and ex- pense of the said improvement shall be assesserl upon the property which shall be deemed to be benefited thereby and what proportion of the cost and expense thereof shall be borne and paid by the city. "The said board may also determine in each ca.se how much of the cost and expense of an improvement shall be asse.ssed upon a restricted area of peculiar benefit and how much, if any, shall be assessed upon a larger area of indirect benefit. The said board may also determine whether the entire assessment shall become due upon confirmation of the same, or whether it may be paid in annual installments, and it shall also determine the number of such annual in- stallments in which such assessments may be paid and the rate of interest which shall be charged upon all such installments from the date of the confirmation of the assessment until each in- stallment shall be paid; provided, however, that the number of installments shall not exceed and the rate of interest to be charged upon the same shall be not less than nor more than per cent, per annum. "The word 'improvement' as used in this section (or act) shall be deemed to include the acquisition of title in fee or easement to any land requii-ed for streets, parks, bridges, tunnels, waterways, drains, sewers or buildings required for any public purpose, or the construction of streets, parks, bridges, tunnels, waterways, drains, sewers or buildings, or any other improve- ment, the carrying out of which in whole or in part will increase the value of the property in the immediate vicinity of such improvement or within a district including the same, or will promote public utility, comfort, health or adornment for the entire city or part thereof. "The general principles which should, in the writer's opinion, govern the distribution of the cost of city improvements may be briefly summarized as follows : 1. "Where there is local benefit, there should always be local assessment. 2. The entire city or the metropolitan district should bear no part of the expense unless the improvement is in some degree of metropolitan import- ance and benefit. 3. Assessments should not be confined to the cost of acquiring and impi-oving streets, but should extend to any improvement which will increase the value of the neighboring property, and should be apportioned as nearly as possible according to the probable benefit. 4. A M'orkable policy once adopted should be consistently adhered to. 5. The determination of a policy and its application to each case should be ^ entrusted to a board composed of men especially qualified, whose terms of office should so overlap as to insure continuity of policy and purpose." 7 93 APPENDIX C JMEMORANDUM AS TO LEGAL STATUS OF ASSESSMENT FOR RAPID TRANSIT DEVELOPMENT IN PENNSYLVANIA. In order to provide a -wholesome control over the demands of outlying sections that unwar- ranted extensions of high-speed lines be made at the City's expense, this report has suggested in several places that the extensions into the outlying districts should be finauced either directly or indirectly by assessment upon the property benefited. Owing to the urgency of the situation, this suggestion was incorporated into the report on the basis of an informal opinion that in Pennsylvania it would probably require the enactment of a special law only. Since this report lias been put in type, however, an official legal opinion of the City Solicitor upon the points involved lias been received and is inserted in this report as Appendix "C." In view of this opinion, it is evident that it will be difficult for the City to adopt such a method, and it will probably be necessary for the City to build the entire lines out of City bonds, unless the districts aft'ected are willing to submit to local assessment voluntarily, as has been the case in a few instances in other cities. Department of Law OP THE City op Philadelphia. rilARCH 30, 1916. Assessment of Benefits upon Propertij-Oioners, etc. William S. Twining, Esq^. Director, Department of City Transit, City Hall, Philadelphia. Dear Sir : — Replying to your communication of the 15th inst., as to whether the City of Phila- delphia is enabled to assess benefits upon the property-owners to bear the burden or portion of the burden of the construction of additional transit facilities, three distinct questions are raised : — 1. Can this be accomplished under the present status of the law? 2. Can this be accomplished by legislation ? Or, 3. Would it require constitutional amendment ? 1. There is no general statute which authorizes the City of Philadelphia, or municipalities generally, to assess owners for local benefits conferred upon property. Those statutes confer- ring the right to assess benefits upon the municii)ality do not include contemplated improvements of this kind. 2. Since the decision of Hammett vs. Philadelpliia. 65 Penna. 146 (1870), it is a well-settled [irinciple of the law that the Legislature may grant to municipalities the power of local taxation for local benefits upon properties benefited. But the local benefit must not merely be incidental to the contemplated improvement; it must be the primary object of it. In the case above men- tioned, tlie Court used the following language : "Local assessments can only be constitutional- when imposed to pay for local improve- ments clearly conferring special benefits on the parties assessed and to the extent of those <».5 benefits. They cannot be so imposed when the improvement is either expressed or appears to be for general public benefit." In the case of Washington Avenue, 69 Penna. 352, an Act authorizing the Commissioners to make an artificial road through a number of townships, assessing the cost upon the abutting own- ers, was held to be unconstitutional, the Court saying: "To do so is confiscation, not taxation ; extortion, not assessment, and falls within the clearly implied restriction in the bill of rights. ' ' It is further held by the courts that in any event onlj' the owners of directly abutting property can be assessed, and these are assessable for purely local benefits alone. The practical difficulty encountered in attempting to apportion and assess a special tax on properties not abut- ting on the improvement would be nearly or quite insurmountable. Although property in the vicinity might be benefited, the imposition of such a tax would not be feasible, even if permis- sible, and for that, among other reasons, this could not be done. In the case of Saw Mill Run Bridge, 85 Penna. 163, it was attempted to assess property- owners for the building of a bridge. The opinion of the Court in part is as follows : "Saw Mill Run crosses a public highway of the city. The bridge over it was built in the line of this highway, in which every inhabitant of Pittsburgh may have some interest and every citizen of Allegheny County and of the Commonwealth is entitled to assert some right. In such an improvement surely no citizen can have exclusively private right and he can scarcely have any definable private interest. The bridge was constructed to serve an ap- parent and essential public purpose, and to impose the cost of it on idividuals selected out of the mass of the community on any conceivable rule that viewers could adopt, would be the placing of public burdens on private shoulders." Again, in the ease of Gratius Run, 31 Superior, 638, in construing an Act which authorized boroughs or cities to alter the course of any channel, creek, etc., the Court held that it did not con- fer on the city power to levy any special taxes against or assess any benefits upon any property not abutting upon the line of improvement. In New York, a statute having the present pur- pose in view has been passed, but its validity has not been judicially established. Wherever the assessment of property-owners for benefits conferred has been sustained, the benefit has been a direct one to the property abutting upon the highway or other place where the specific improve- ment was physically located, and the amount could be actually ascertained by the measure of the advantage to the particular property affected. 3. It follows from the foregoing decisions, which might be multiplied almost indefinitely, not only in this State but elsewhere, that no Act of the Legislature having in view the assess- ment of benefits upon property for the construction of transit facilities, or the assessment in any other manner of all or a part of their cost upon individual property-owners, would be sustained as constitutional. It also follows that the only method in which this could be done would be by the slow process of constitutional amendment. As you are aware, an amendment to the Con- stitution requires to be proposed at one session of the Legislature, acted upon affirmatively, re- ferred to a second session, the Legislature meeting biennially, again acted upon favorably, and then submitted to a vote of the people. Tliis, together with the time elapsing for the passing of the necessary statutory legislation, would compel an interval of four or five years before such an amendment could become effective. Added to this would be the great difficulty, even after the 96 amendment of the Constitution, of formulating an Act of Assembly which would enable a proper division to be made between that part of the cost which should be borne by the public and that part to be charged against property-owners, and dividing the latter among such own- ers individually. I think these considerations, if they do not make it absolutely impossible, certainly make it impracticable, to resort to this method of financing the contemplated improvement, and that in considering the available means for so doing any project looking to the assessment of benefits upon the owners of adjacent or other property may best be eliminated. Yours very truly, (Signed) JOHN P. CONNELLY, City Solicitor. 97 I ■4 University of Ca'»0';"Jf^ facility SOUTHERN REGIONAL UBRARYFA^^^^^ from which it wasborrowed. \ / UC SOUTHERN HE'j D 000 470 808 7 mm- ua