The Southern California Regional Rail Authority (SCRRA), or Metrolink, has been serving Los Angeles and its surrounding counties for decades, moving millions of passengers a year. Founded in 1991, the commuter rail network is one of the largest in the nation at 437 miles of track. Size is not enough to attract riders, though. Over FY25, Metrolink carried only 7.6 million passengers whereas Caltrain, using only 77 miles of track, carried 8.4 million passengers. One of the fundamental differences between the two systems is the pattern of land development in Los Angeles versus the Bay Area.
What many consider to be the golden age of rail in Los Angeles, the early 1900s, can more accurately be called a golden age of real estate speculation. Henry Huntington’s Pacific Electric Railway Company, while providing a valuable service, was a loss leader. The railway provided cheap transportation and electrification, causing the property values on Huntington’s land to skyrocket. The Pacific Electric network was the circulatory system for Metropolitan Los Angeles, allowing millions of workers in suburban communities to work in the city. However, the business model of building transit, developing the land around it, and selling it off shortly after has a key flaw: land isn’t infinite. Once Huntington reached the limits of streetcar sprawl, the loss leader transit network stopped being an asset and became a liability. The tracks that once spanned over 1,000 miles were abandoned line by line, gradually being replaced with subpar bus networks and freeways.
A map shows the reach of the Pacific Electric Railway (1912) | Image Source: University of California, Los Angeles
This story is hardly unique. If a passenger rail network operates today, it either does so through subsidies or real estate developments. Metrolink operates under the former. Whether this is acceptable is a worthwhile question to ask. While the local agencies that contribute toward Metrolink’s budget have been willing to fill in growing gaps, raising operating subsidies from $157.4 million to $264 million from FY20 to FY25, tax dollars are not infinite. It is time for Metrolink to seek supplemental revenue streams.
In FY18, before the COVID-19 pandemic decimated ridership, Metrolink was only able to pay for 35.5 percent of its operating budget through the farebox. Compared to other commuter rail networks in major metropolitan areas, Metrolink is below average at best. In the same year, Caltrain recovered 73 percent of its operating budget through fares.
In the wake of the pandemic, public transit has suffered. Metrolink’s farebox recovery rate has plummeted to 15 percent, leaving the public to cover $264 million in operating deficit. Caltrain has fared better with a recovery rate of 24.5 percent. In either case, commuter rail is at the mercy of ridership trends to make revenue, and has to turn to public budgets to cover the remainder.
Passenger revenue plummets due to the COVID pandemic | Image Source: Metrolink
The burden on public funds caused by Metrolink’s poor ridership is unacceptable. Instead of blindly subsidizing the system, local governments should be working with Metrolink to increase revenue. There are two paths to solvency: increased ridership and real estate development.
Metrolink’s rolling stock of full locomotives is expensive to operate. It costs $84 per mile, compared to the Orange County bus network’s $15 per mile. Because of this, commuter rail depends on high, consistent ridership to offset costs. In other words, trains operate most efficiently where population density is high, a quality that Los Angeles lacks.
Making the most of their environment, Metrolink has taken initiative to raise ridership. One unique feature of Metrolink that is missing on other networks is special train service. This can include cooperation with local schools as in the prom train or even a winter Holiday Express Train. Beyond these however, most programs designed to increase ridership rely on providing fare-free trips to riders. While this does increase ridership, it ignores the issue of revenue.
Aside from passengers, a new income generation tool has just been handed to Metrolink: real estate. With the signing of SB 79 on October 10, 2025, transit agencies were granted permission to develop dense, mixed-use properties on the land they own within certain counties. With 40 stations in Los Angeles and Orange counties, there are thousands of units of potential.
Metrolink does not own many of its stations it services outright. For example, the Anaheim Regional Intermodal Transportation Center (ARTIC) is a 13.5 acre facility currently owned by the City of Anaheim. SB 79 would allow Metrolink to develop hundreds of units on this site. If granted the capital to purchase and build, Metrolink could develop what are currently acres of parking lots surrounding the station into hundreds of mixed-use units. With the average rents in the area clearing $2,000 and zoning that allows over 100 units per acre, this development alone could provide millions of dollars in revenue every year.
The ARTIC station connects Anaheim to the Metrolink network | Image Source: HOK
This idea is as old as the railroad, but is not a relic of the past. Even today, some of the most successful railroads utilize real estate as a significant revenue stream. It could be argued that these railroads are only able to generate this revenue because their cities are already dense, meaning that the network effects of mass transit are very strong. Of course, that is the case. To take that stance and therefore oppose agency-owned developments however, is to resign metropolitan Los Angeles to car-dependency. The sprawl of the past century took time and investment to develop, it will take even more to reverse.
This political moment is unique. With the signing of SB 79, the California legislature has given transit agencies the opportunity of a lifetime, a chance at financial independence. Government agencies have an ability to tolerate financial risks that private investors cannot, and that can be exploited for the public’s gain. State and local governments need to be decisive. Will they provide the capital to start building or continue wasting millions of tax dollars on subsidies?
Featured Image Source: Mark Fischer
