Purple Line Study

PRELIMINARY ECONOMIC IMPACT STUDY: UPDATE
Transportation Economics &

Management Systems, Inc.
March 2015
PURPLE LINE
TABLE OF CONTENTS
1
2
INTRODUCTION (STUDY PURPOSE AND CORRIDOR) .................................................................................. 1

ECONOMIC ANALYSIS FRAMEWORK ............................................................................................................ 4
2.1
The Character of the Overall Economy .................................................................................................4
2.2
Economic Rent Methodology .................................................................................................................6
THE ECONOMIC EVALUATION DATABASES .............................................................................................. 11
3.1
Introduction ......................................................................................................................................... 11
3.2
Economic Benefits Study Process ........................................................................................................ 11
3.3
Transportation Networks: General Overview ...................................................................................... 12
3.4
Auto Network ....................................................................................................................................... 13
3.5
Transit Network ................................................................................................................................... 15
3.6
Zone System ......................................................................................................................................... 17
3.7
Socioeconomic Database ..................................................................................................................... 18
3.8
Trip Database ...................................................................................................................................... 20
3.9
Conclusion ........................................................................................................................................... 21
THE TRAVEL DEMAND MODEL AND TRAFFIC FORECASTS ...................................................................... 22
4.1
Travel Demand Model ......................................................................................................................... 22
4.2
Socioeconomic Variables ..................................................................................................................... 24
4.3
Demand Model Calibration ................................................................................................................. 24
4.4
Travel Demand Forecast ..................................................................................................................... 25
TEMS ECONOMIC RENT MODEL ............................................................................................................... 26
5.1
Model Calibration ............................................................................................................................... 26
5.2
Assessment of the Impact of Economic Growth ................................................................................... 32
ECONOMIC RENT RESULTS ....................................................................................................................... 36
6.1
Overall Economic Rent Results ........................................................................................................... 36
6.2
Economic Rent for Montgomery, Prince Georges and Washington DC ............................................ 38
INPUT-OUTPUT ANALYSIS: CONSTRUCTION OF THE PURPLE LINE ......................................................... 43
7.1
Scope of Evaluation ............................................................................................................................. 43
7.2
Input-Output Methodology .................................................................................................................. 43
7.3
Application of Regional Input-Output Modeling System ..................................................................... 44
7.4
Results .................................................................................................................................................. 48
CONCLUSION ............................................................................................................................................... 60
APPENDICES
APPENDIX A: DATA SOURCES AND METHODS FOR RIMS II ................................................................................ 61

APPENDIX B: STATED PREFERENCE SURVEY ........................................................................................................... 66
REFERENCES
........................................................................................................................................................ 80
Transportation Economics & Management Systems, Inc.
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1 INTRODUCTION (STUDY PURPOSE AND CORRIDOR)

The purpose of this study is to update the Purple Line Economic Analysis developed by Transportation
Economics & Management Systems, Inc. (TEMS) in 2010.
The aim of Purple Line light rail is to provide better connectivity between Bethesda in Montgomery County
and New Carrollton in Prince Georges County. As it is proposed by Maryland Transit Administration
(MTA), U.S. Department of Transportation (USDOT) Purple Line would provide a direct connection to the
Metrorail Red, Green and Orange Lines; at Bethesda, Silver Spring, College Park, and New Carrollton.
The Purple Line would also connect to MARC, Amtrak (Northeast corridor), and local bus services1. A map
showing the proposed Purple Line Preferred Alternative2 along with stations and other metro, MARC and
rail lines is shown in Exhibit 1.1.
Exhibit 1.1: Purple Line Route and Station Map
The approach of the Economic Impact Study is to measure supply side benefits generated by the Purple
Line Project. To do this, two impact analyses have been used by Transportation Economics & Management
Systems, Inc. (TEMS) in evaluating the Economic Benefits for the Study. These are as follows:
Long-Term Supply Side Impacts: Used to identify the economic impacts of the 16-mile light rail line to the
communities in the region, especially Montgomery and Prince Georges Counties. Since the implementation
of the Purple Line light rail project calls for the investments by both the public and private sectors it is clear
See: http://purplelinemd.com/about-the-project for details.
According to MTA, The Preferred Alternative is a refined version of the Locally Preferred Alternative ( LPA) identified in AA/DEIS
2009 (see http://www.purplelinemd.com/images/studies_reports/feis/volume_01/013_PL%20FEIS_Vol-I_Ch%209%20Evaluation-ofAlts.pdf for more information).
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that a project needs to be fully evaluated in economic terms, which includes the economic impact of the
project on the local economy. Typically, federal and state governments have required a demand-side
analysis of the economic benefits of a project which may be characterized as traveler or user benefits that
measure time, cost and energy savings, and also external resource savings associated with making trips in
the study region. However, of real interest to policy makers and individuals who live in a corridor are the
supply side benefits of a project which may be characterized as community benefits or productivity
benefits such as increased jobs, income and wealth that result from implementing the project.
Economic Rent Analysis of supply side community economic benefits can be estimated using the TEMS
RENTS model. This methodology is fully documented in the academic literature of transportation
economics [1], [2], [3], and [4], and it is well established that while Consumer Surplus measures benefits
from the demand side, Economic Rent measures benefits from the supply side. Because the economy is
circular and demand must equal supply for the economy to be in equilibrium, Economic Rent analysis, is the
mirror image of consumer surplus. Economic Rent is however a less well-used methodology. This is
because it is more difficult to measure economic rent than to measure consumer surplus. The work on
specific measurement methodologies for economic rent has only been conducted in the last twenty years.
This reflects the growth of computer power and the ability of modern computers to handle the large
number of calculations associated with conducting an Economic Rent Analysis.
As documented in the literature [5] through [6] the initial work on economic rent grew out of urban
economics and in particular the measurement of property prices and commuting activity. This work was
later supplemented by the development of transportation analysis methodologies that greatly enriched the
economic rent measurement process. This included transportation access measurement (by measuring
transportation utility) and traffic movement databases (showing market interaction) that are so critical to
economic rent [7]. The final formulation of economic rent methodology required the inclusion of the
Economic Theory of Location and, specifically, Central Place Theory [8], [9] to provide a structure of
markets to which the general economic rent proposition could be applied. This then provided an effective
application method. Essentially the economic rent measures the improvement in income, employment and
property value that individuals receive as a result of a transport investment (improved accessibility) which
allows the market to work more efficiently and to raise individuals productivity.
Temporary Construction Impacts: The construction impacts of the Purple Line light rail will constitute a
significant investment in the region, especially Montgomery and Prince Georges Counties by the Federal
Transit Administration (FTA). This Federal investment would comprise a major transfer payment to the
region that would significantly increase total spending within the Montgomery and Prince Georges
Counties economy. The spending of federal dollars cannot be expressed as a benefit to the U.S. economy,
since the investment might well have been made elsewhere, rather than in the Purple Line project. However,
it is clear that such an investment choice on the part of the Federal government will have a significant
economic impact on the local regional economy. To estimate the economic impact of the additional federal
construction spending in the region, especially Montgomery and Prince Georges Counties, an analysis was
performed using the Bureau of Commerce, BEA, Regional Input-Output Modeling System II (RIMS II)
economic model.
The following report updates these analyses to a 2015 base, and applies the update to the Purple Line
Impact Study. The update is applied to databases, methodology and the results of the study. The report
includes the following:
Chapter 1: Introduction - The study purpose and corridor
Chapter 2: Economic Analysis Framework This includes a brief assessment of the overall economic
framework and the relationship between Consumer Surplus and Economic Rent.
2.1: The Character of the Overall Economy in the Purple Line corridor.
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2.2: Economic Rent Methodology covers theoretical and technical issues of the developed
methodology Economic Rent (evaluating the supply side of the Study).
Chapter 3: The Economic Evaluation Databases This describes the process of developing socioeconomic
and transportation databases, as well as different methodologies necessary to perform both parts of
economic benefits evaluation study.
Chapter 4: The Travel Demand Model and Traffic Forecasts describe the model developed by TEMS for
this study. The chapter also shows how the model was calibrated for this study, illustrates the forecasting
process, and the forecast results that were obtained.
Chapter 5: TEMS Economic Rent Model
Chapter 6: Economic RENT Results
Chapters 5 through 6 present the economic benefits associated with the Purple Line corridor and were
evaluated by the Economic Rent model. Economic evaluation results for Montgomery and Prince Georges
Counties that especially benefit from the Purple Line project were analyzed. Transfer payments in terms
of tax benefits are particularly discussed here.
Chapter 7: Input-Output Analysis: Construction of the Purple Line This Chapter presents an InputOutput analysis to identify the transfer payment benefits of a major investment like the Purple Line
Preferred Alternative (cost $1.9 billion) on the economy in terms of temporary construction and permanent
operating jobs.
Chapter 8: Conclusion: This chapter describes the overall benefits to the study region of the Purple Line
project.
Appendix A: Data Sources and Methods for RIMS II This discusses an Input-Output (I-O) Matrix which is
an accounting framework that mainly underpins the RIMS II methodology.
Appendix B: Stated Preference Survey This describes the methodology, the purpose, the process and the
results of the Stated Preference Survey undertaken by TEMS in 2010.
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2 ECONOMIC ANALYSIS FRAMEWORK

In order to estimate the economic impact of the Purple Line project, it is important to understand the
character of the different economic benefits to be quantified. These benefits arise from developing and
operating the system and have a substantial impact on the productivity of the local and state economy.
2.1 THE CHARACTER OF THE OVERALL ECONOMY

A model of the economy [10] shows that an economy is circular in character, with two equal sides (see
Exhibit 2.1). On one side of the economy is the consumer side the market for goods and services in
which consumers buy goods and services by spending the income earned by working for a commercial
enterprise. For example, a transportation investment improves individuals travel times and costs and,
therefore, increases consumer (traveler) surplus (travel and money savings). An analysis of the impact of a
transportation investment in the market for goods and services quantifies the level of consumer surplus
generated by a project, by showing how much money and travels individuals save because a given project
(i.e., a transportation improvement) reduces their cost of travel, or makes their travel more efficient.
Exhibit 2.1: Simple Model of the Economy
Revenue
Spending
Markets for Goods

and Services
Firms sell
Households buy
Goods and
Services
Sold
Inv es t m ent
FIRMS
Produce and sell
HOUSEHOLDS
Buy and consume
goods and services

Hire and use factors of
production
Inputs for
Production
Wages,
Rent and
Profit
Goods
and
Services
Bought
Markets for Factors of

Production
Firms buy
Households sell
Sav ings
goods and services

Own and sell factors
of production
Labor,
Land and
Capital
Income
The notion that a transportation project can be worthwhile if travel is made more cost effective is based on
the idea that not only the cost, but also the time of a trip, has value. This axiom is agreed to by most
transportation companies and by business travelers as well as by both academia and important
transportation authorities such as USDOT Federal Highway Administration (FHWA)3 and Maryland State
Transit Administration (MTA). In addition, academic and empirical research has shown that this concept
holds true for commuters and social, recreational travelers as well [11]. Considerable research has been
carried out to both identify the theoretical justification for value of travel time and to quantify its value.
3
See: http://ops.fhwa.dot.gov/tolling_pricing/value_pricing/tools/truce_st_devpfrom3_0.htm
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On the other side of the economy is the market for factors of production. Most importantly, it is the market
for land, labor and capital, which individuals provide to firms in exchange for wages, rent and profit. From
the perspective of policy makers and the local community, this side of the economy is very interesting as it
shows how investment in a new transportation infrastructure changes the efficiency of the economy and how
the investment increases transportation efficiency, creates new jobs, opportunities, and, therefore, increases
income and wealth and expands the tax base.
One of the most important aspects of the circular economy model is that it shows that any project has two
impacts, one in the consumer market the benefits to travelers; the second, in the factor markets or supply
side of the economy the benefit to the community in terms of improved welfare such as increases in jobs,
income and wealth (see Exhibit 2.2).
Exhibit 2.2: Relation between Consumer Surplus and Economic Rent in the Economy
Reduced Transportation Prices
Increased Consumer
ConsumerSurplus
Surplus
Demand
Supply
Shoes
Shoes
Prices on
Goods
Market
Housing
Transportation
Housing
Transportation
Transportatio n
Demand Market
Consumer
Service Retail
Agriculture
Mining
Household
Supply Market
Owner of
Assets
Labor
Land
Capital Goods
Supply
Investment
Prices on
Factor
Markets
(Wages,
Rent,
Interest)
Manufacturing
Labor
Exports
Land
Imports
Capital Goods
Demand
Reduced Transportation Costs
Increased Economic Rent

Increased
For the economy to reach equilibrium, both sets of benefits must be realized. As such, the benefits of a
project are realized twice, once on the demand side and once on the supply side. As a result, there are
two ways to measure the productivity benefits of a transportation project and, theoretically, both
measurements must equal each other [12]. This is a very useful property since in specific analysis one can
be used to check the other, at least at the aggregate level. This is very helpful and provides a check on the
reasonableness of the estimates of project benefits.
However, in assessing the benefits of a transportation project, it is important not to double-count the
benefits by adding supply side and demand side benefits together. It must be recognized that these two
sets of benefits are simply different ways of viewing the same benefit. The two markets are both
reflections of and measure the same thing. For example, if both sets of benefits equal $50 million, the total
benefit is only $50 million, but expressed in two different ways: travelers get $50 million of travel benefits
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and the community gets $50 million in jobs, income, increased profits. As a ripple effect (or transfer
payment) the economy also gets an expanded tax base.
Therefore, if a given transportation project is implemented, equivalent productivity benefits will be seen in
both the consumer market for goods and services (as the economy benefits from lower travel times and
costs), as well as in the supply side factor markets. In the supply side market, improved travel efficiency is
reflected in more jobs, income and profit. For a given transportation investment, therefore, the same
benefit occurs on both sides of the economy. In the consumer markets, users enjoy lower travel costs and
faster travel times. On the supply side of the economy, the factor markets take advantage of the greater
efficiency in transportation. As a result, both sides of the economy move to a new level of productivity in
which both sides of the economy are balanced in equilibrium.
Improved efficiency will generate supply-side spending and productivity benefits that have a very real
impact on the performance of the local economy. The method that develops estimates of productivity jobs
and wealth creation is an Economic Rent Methodology. It measures how the performance of a new
transportation facility raises the efficiency of the economy. This efficiency improvement creates jobs and
income, and raises local property values to reflect the improved desirability of living or working in the
area. Specific methods for applying Economic Rent economic theory will be identified and appropriate
measurement methodologies will be developed. In particular, the issue of measuring the quality of the
transportation system will be addressed.
2.2 ECONOMIC RENT METHODOLOGY

The concept of Economic Rent is derived from basic Ricardian economic theory and provides a means of
explaining the increased value of economic resources (land, labor and capital) and their change in value in
different circumstances or market conditions. For a transportation investment, accessibility is a key spatial
variable that affects the likely uses of economic resources and, therefore, their value. Changes in
accessibility result in changes in the economic rent (or monetary value) that economic resources can
command and, therefore, the value and character of the economic activities that take place at any
location. As a result, for important economic welfare criteria (such as employment, household income, and
property values) an evaluation can be made of the likely change in economic rent that will be associated
with an improvement in accessibility generated by a given transportation investment [13].
Economic Rent may be defined as the difference between what the factors, or productive services, of a
resource-owner earn in their current occupation and the minimum sum he/she is willing to accept to stay
there. It is then a measure of the resource-owners gain from having the opportunity of placing his factors
in the chosen occupation at the existing factor price, given the prices his factors would earn in all other
occupations. It is the proper counterpart of consumers surplus when this is regarded as the consumers gain
from having the opportunity of buying a particular good at the existing price, where all other prices are
given. And like a change in the consumers surplus, it is a measure of the change of his welfare when the
relevant prices in the market are altered. Whereas the increase of consumers surplus is a measure of his
welfare gain for a fall in one or more product prices, the increase in that persons economic rent is a
measure of his welfare gain from an increase in the price or the volume of the sale of his factors, i.e.,
increased sales should generate increased profit.
Typically, the level of economic rent can be calculated as follows:
Economic Rent (ER) = f (Pt, It, Et, Ct, Tt)
Where:
Pt is a measure of Population structure of an area in year t;
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It is a measure of Industrial structure of an area in year t;
Et is a measure of Education level of an area in year t;
Ct is a measure of Cultural characteristics of an area in year t;
Tt is a measure of Transportation efficiency of an area in year t.
Any analysis region (area) has its own Economic Rent Profile. Economic rent profile shows the spatial
distribution of the economy in terms of key factors such as income, property value and wealth. Each of the
characteristics listed above can have a significant impact on economic rent profile.
Population Structure: The population structure can affect the economic potential of an area positively or
negatively. For example, an aging population could have a negative effect on the economy as the number
of workers in the work force may fall. This can reduce productivity and, as a result, reduce the economic
rent profile. The U.S. might experience this problem in the second quarter of this century as baby boomers
age if technology improvements and increased output do not raise productivity sufficiently. Typically, the
more productive the adult population of an area is, the higher the economic rent profile.
Industrial Structure: The nature of the industrial structure and resource base defines the potential economic
rent profile of an area, e.g., manufacturing, commercial, agricultural, residential, and service industry. The
higher the value added by industry, the higher the areas economic rent profile. For example, the new
economy jobs in biotech, computers and finance all have very high incomes and economic rent profiles
associated with them.
Education Level: Educational levels can have a dramatic impact on economic rent potential of an area.
Typically, a higher education level (especially Ph.D.s or other high degrees) will increase the wealth
generated by the population. The Baltimore-Washington region, for example, boasts one of the highest
concentrations of Ph.D.s in the U.S., which supports the growth of high tech industry in the region4.
Cultural Characteristics: Differences in cultural, ethnic and other social characteristics of an area can impact
its economic potential. For example, cultural belief systems can impact the ability of a population to work
at certain jobs or in a certain way and, therefore, the level of economic rent that can be attained. A survey
by the United Nations of the economic growth potential of Arab countries found that the low level of
freedom, limited Internet use and the absence of women in the workforce have had a marked negative
impact on economic productivity [14]
Transportation Efficiency: Transportation efficiency can greatly affect the economic potential of an area.
The more effective a transportation system in moving people and goods, the greater its ability to generate
wealth if the economy is responsive to the opportunity presented. It is no coincidence that most of the U.S.s
large east coast cities grew as break of bulk ports at locations that had good harbors and good routes to
the interior resources and markets of the U.S. Since the quality of a transportation system is a management
variable and can be changed in the short term, investment in the transportation system can generate
economic development if the investment is made in a growing and vibrant economy. The level of response
that the economy will have to a transportation investment is measured by the economic rent profile.
According to the data assembled by the Metropolitan Washington Council of Governments (source: US Census Bureau), 20.6
percent of individuals over the age of 25 residing in the Baltimore-Washington region have a graduate or professional degree. This
is well above the national average of 8.9 percent.
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Where it is important to recognize that education, population, industry, structure, and culture can change
over time changing the economic rent profile. However, these are not characteristics that typically change
rapidly. Only if an area experiences a significant dislocation or migration associated with rapid and
dramatic population and industrial base shifts will it experience a radical change in its economic rent
profile. For example, the influx of Hong Kong residents to Vancouver, Canada, in the 1980s dramatically
changed the economic rent profile of several areas of the citys downtown. The effect was largely due to
the wealth and entrepreneurial capability of this new population. In the United States one of the issues
for the Midwest is the fact that while it has some of the countrys leading academic institutes, it is still losing
much of this talent because it is not developing the New Economy businesses at a sufficient rate.
In the absence of a major dislocation, we can assume that the economic rent factors It, Et, Pt, and Ct will
remain largely unchanged in the short term (10-20 years). However, transportation efficiency can change
significantly in the short term. Major transportation infrastructure projects can dramatically change the
accessibility of markets and the opportunity for economic growth. This can apply to the measurement of
goods in a manufacturing-dominated economy or to the movement of people in a service industrydominated economy. The economic rent generated by transportation improvements (Tt) has driven the
desire to move people more quickly and cost-effectively over time. As a result, if population, industrial
structure, education levels, and cultural characteristics remain constant, the Economic Rent (ER) model
reduces to:
ER = f(Tt)
By using socioeconomic variables (SEi) as a proxy for economic welfare and generalized cost (GCi) as a
specific metric for transportation efficiency measured in terms of time and cost the economic rent equation
can be rewritten as:
SEi = oGCi 1
(3)
Where:
SEi Economic rent factors i.e., socioeconomic measures, such as: employment, income, property value of
zone i;
GCi - Weighted generalized cost of auto travel for all purposes from (to) zone i to (from) other zones in
the study area;
o and 1 - Calibration parameters.
The resulting curve generated by this function is the economic rent profile for transportation accessibility.
The generalized cost of auto travel includes all aspects of travel time (in-vehicle time), travel cost (tolls, fuel
costs and parking charges).
The generalized cost of travel is typically defined in travel time rather than dollars. Costs are converted to
time by applying appropriate conversion factors. The generalized cost of auto travel between zones i and
j for purpose p is calculated as follows:
GCijp TTijp
TCijp
VOTp
(4)
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Where:
TTijp
Travel time between zones i and j for purpose p5;
TCijp
Travel cost between zones i and j and purpose p (toll and operating costs for auto);
VOTp
Value of Time for purpose p
The Economic Rent theory builds from the findings in Urban Economics, and Economics of Location that
support Central Place Theory6. Central Place Theory argues that in normal circumstances places that are
closer to the center have a higher value or economic rent. This can be expressed in economic terms,
particularly jobs, income, and property value. There is a relationship between economic rent factors (as
represented by employment, income, and property value) and impedance to travel to market centers (as
measured by utility or generalized cost). As a result, lower generalized costs associated with a transport
system improvement lead to greater transportation efficiencies, and increased accessibility. This, in turn,
results in lower business costs/higher productivity and, consequently, in an increase in economic rent. This is
represented by moving from point A to point B in Exhibit 2.3.
Exhibit 2.3: Economic Rent Illustration
Issues of travel time calculation, including the weighting factor for travel time is broadly discussed in the literature. See, for
example: [15] and [16].
6
See: [7] and [8].
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It should be noted that the shape of the economic rent curve reflects the responsiveness of the economy to
an improvement in accessibility. Large cities typically have very steep curves, which indicate more
significant economic impacts due to a transportation improvement; smaller communities have less steep
curves, and rural areas have very flat curves that indicate lower economic responsiveness (see Exhibit 2.4).
Exhibit 2.4: Types of Economic Rent Curve
Large Economic Rent
Economic Rent
Factors (e.g.
(e.g.,
Income,
Property
Value)
Low Economic Rent
Little Economic Rent
Increasingly Poor Accessibility

Urban
Rural
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3 THE ECONOMIC EVALUATION DATABASES

3.1 INTRODUCTION
The purpose of the Purple Line Economic Impact Study update is to explore the economic productivity
impacts that will result from the Purple Line rail corridor. The tool being developed to estimate these
impacts is TEMS Economic Rent model (RENTS) which generates producer impacts. To meet this need a
series of databases calculation processes were developed for the study. The following section outlines the
development and calibration process adopted by the study.
3.2 ECONOMIC BENEFITS STUDY PROCESS

The modeling and calibration process for the Economic Rent assessment is shown in Exhibit 3.1. This overall
process has five main stages as follows:
Stage 1: Auto and transit networks, origin-destination and socioeconomic databases are developed
in order to provide input to the evaluation tools, so that they can meet the assessment
requirements. Those databases are related to a comprehensive zone system that defines specific
geographic areas.
Stage 2: Stated Preference Surveys were undertaken. The surveys aimed at the better
understanding the transportation needs of the local business and providing the data needed to
evaluate travel demand functions for transportation demand model.
Stage 3: A transportation demand analysis applies the calibrated demand functions in the
COMPASS travel demand model to provide traffic volumes and the cost of travel (generalized
cost) that are used in Economic Rent Model.
Stage 4: Economic Rent modeling and supply curve calibration is developed using the RENTS
model.
Stage 5: Economic Rent analysis with producer benefits results and community benefits are
generated.
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Exhibit 3.1: Economic Impact Study - Modeling and Calibration Process
Auto/Transit
Transportation
Networks
Stated
Preference
Surveys
Origin
Destination
Travel
Database
COMPASS
Demand Model
Calibration
Travel Demand
Model Run
Community &
Community
Station Benefits
Benefits
Results
Results
Socioeconomic
Database
Base Year
Trip
Matrix
Forecast
Year Trip
Matrices
Producer Benefits
Results
Zoning
System
RENTS Database
Development
RENTS Model
Calibration
Economic
Rent
Analysis
3.3 TRANSPORTATION NETWORKS: GENERAL OVERVIEW

Industry-standard procedures were implemented to develop the road networks that represented travelers
route choices. The current transportation networks and future networks for the study area were developed
based on the latest transportation networks provided by Parsons Brinckerhoff, Inc. (PB) and the two
regional Metropolitan Planning Organizations Metropolitan Washington Council of Governments
(MWCOG) and Baltimore Metro Council (BMC). The networks for the study region were developed based
on Transportation Analysis Zones (TAZ) system either from MWCOG or BMC, depending on the area.
The networks were constructed using a node numbering system to reflect the relevant auto and transit
travel segments within the study area. The segments were coded using network-mapping software to
obtain a latitude/longitude location mapping and segment distances for all relevant highways and arterial
roads. Equivalency files developed for the PB and MPOs network attributes were used to extract the
segment attributes for the aggregated road link types in the system. A two-mode network system was
developed for the Purple Line study. Auto and transit networks that are parts of this system are described
in more detail on the following page.
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3.4 AUTO NETWORK

The 2015 network database developed based on PB, MWCOG and BMC contained latitude-longitude
coordinates, node-to-node coded links, distance, lane numbers, speed codes, and capacity codes. The base
and future network maps were provided to highlight all major highways segments within the study region
of MWCOG. An aggregate equivalency file was developed to transform the urban networks into an interurban context that more closely reflected the purpose of this study. This equivalency file also allowed the
filtering of urban links that would not be relevant to the study. Exhibit 3.2 illustrates the major segments
that were included in the network.
Exhibit 3.2: Major MWCOG Highway Links Coded within Network
Highway Description
Segment Description
Interstate-95
Fredericksburg to I-195
Interstate-495
Entire Beltway
Interstate-66
Linden to Downtown Washington DC
Interstate-395
Entire Highway
Interstate-270
I-495 to Frederick, MD
Interstate-295
I-495 South of Downtown Washington DC to I-195
Interstate-70
Frederick, VA to I-695 Beltway
SR 267
I-495 to Leesburg, VA
George Washington Parkway
Entire Parkway
US 29
Downtown Washington DC to I-70
US 1
Downtown Washington DC to I-495 Beltway
US 301
US 50 to Waldorf, MD
US 50
Downtown Washington DC to Annapolis, MD
The BMC highway network was developed for specified links within its study area. The BMC network files
contained latitude-longitude coordinates, node-to-node coded links, distance, lane numbers, speed codes,
and capacity codes. An aggregate equivalency file was built to filter relevant links within the study area.
The BMC network attributes were applied to highway links within its modeling jurisdiction. Exhibit 3.3
illustrates the major segments from the BMC network that were used in the TEMS Purple Line network.
Exhibit 3.3: Major BMC Highway Links Coded within Network
Highway Description
Segment Description
Interstate-95
I-495 to Aberdeen, MD
Interstate-695
Entire Beltway
Interstate-895
Entire Highway
Interstate-795
I-695 to Reisterstown, MD
Interstate-83
Downtown Baltimore, MD to Hunt Valley, MD
Interstate-295
I-495 to Downtown Baltimore, MD
Interstate-70
Frederick, MD to I-695 Beltway
Interstate-97
I-695 to US 50
Interstate-195
I-95 to BWI
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MD 100
US 29 to I-97
US 29
I-495 to I-70
US 32
US 29 to I-97
US 40
I-695 to Downtown Baltimore, MD
The highway network was an aggregated amalgamation of the PB, MWCOG and BMC networks plus
additional roads in the study area. Exhibit 3.4 shows the highway network developed by TEMS for the
Purple Line Study. Exhibit 3.5 shows the detailed network developed for the improvement area under
study.
The auto operating costs were adjusted using common procedures to reflect the perceived costs that
different markets exhibit behaviorally. The auto cost was allocated as 57.5 cents/mile for the business
travel purpose based on the 2015 IRS standard mileage reimbursement rate for business travel7. This rate
reflects the full vehicular operating cost and includes indirect costs such as depreciation, maintenance, wear
and tear, and insurance as well as direct costs such as gasoline. The assumption is that business travelers
decisions are based on the full cost of travel that reflects the anticipated amount that will be reimbursed
for the trip. The non-business markets, however, do not consider all the indirect costs of operating a vehicle
when making a decision to drive and typically only consider the direct costs. The non-business auto
operating costs are therefore factored by 0.3 to yield an operating cost of 17 cents/mile. This cost better
reflects the perceived cost that this market behaviorally responds to. This adjustment is a typical and
standard procedure implemented within the modeling process.
Exhibit 3.4: Study Region Auto Network
http://www.irs.gov/uac/Newsroom/New-Standard-Mileage-Rates-Now-Available;-Business-Rate-to-Rise-in-2015
March 2015
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3.5 TRANSIT NETWORK

Base (2015) transit network was developed using mainly PB, WMATA and MTA networks. PB provided
information on proposed station and links of the transit services. Since PB network base year was 2005,
such information as fare and frequency was updated using WMATA data for the year 2015. In order to
develop the networks outside PB or WMATA study regions (mainly in Baltimore metro and surrounding
areas) the information from MTA and BMC was used. The transit services covered in the transit networks
included the Metro, MARC, light rail, and local bus. Exhibit 3.5 provides the details of transit services
coded in the network. The transit network developed for the study is presented in Exhibit 3.6.
In the future transit network, the Purple Line Preferred Alternative was incorporated into the base transit
network. The Purple Line Preferred Alternative is principally the medium investment light rail transit
alternative of the AA/DEIS with several features taken from the high investment alternative, and several
other refinements. The total length of the Preferred Alternative is 16.2 mile and total travel time is 60/63
minutes (60 minutes during off peak hours and 63 minutes during peak hours). Exhibit 3.7 provides
information on distance, travel time and average speed between stations of Preferred Alternative. All this
information has been coded to the future network. Exhibit 3.8 shows the Purple Line corridor in the future
transit network.
Exhibit 3.5: Study Region Network
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Exhibit 3.6 Major Transit Links Coded within Network

Transit Services Description
Segment Description
Washington Metro
Red, Green, Blue, Yellow, Orange Line
MARC
Penn Line, Camden Line, Brunswick Line
Washington Metro Bus
WMATA J1, J2, J3, J4, C2, F4, F6, UM Shuttle, etc.
Amtrak VRE
Fredericksburg Line, Manassas Line
Baltimore Transit
Baltimore Metro, Baltimore Light Rail
Exhibit 3.7: Travel Attributes of the Purple Line Preferred Alternative

Station-to-Station
Distance
Time
Average
(feet)
(decimal
Speed
minutes)
(Mph)
Station-to-Station
Bethesda - Connecticut Avenue
7150
2.9
28
Connecticut Avenue - Lyttonsville
7200
2.8
29
Lyttonsville Woodside
5400
2.2
27
Woodside - Silver Spring Transit Center
2800
1.8
18
Silver Spring Transit Center Silver Spring Library
2200
3.5
Silver Spring Library Dale Drive
3050
2.5
14
Dale Drive Manchester Place
2900
2.6
13
Manchester Place Long Branch
2250
1.8
14
Long Branch Piney Branch Road
2500
3.8
Piney Branch Road Takoma/Langley Transit Center
3400
2.8
14
Takoma/Langley Transit Center Riggs Road
3250
2.6
14
Riggs Road West Campus
7350
3.8
22
West Campus UM Campus Center
3200
2.6
14
UM Campus Center East Campus
2750
2.9
11
East Campus College Park Metro
4800
5.3
10
College Park Metro M Square
4450
2.7
19
M Square Riverdale Park
4250
2.8
17
Riverdale Park Beacon Heights
5150
4.5
13
Beacon Heights Annapolis Road
6250
2.5
29
Annapolis Road New Carrollton
5250
5.2
12
Exhibit 3.8: Transit Network with Purple Line Highlighted
New Carrollton
Silver Spring
Bethesda
College Park
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PURPLE LINE
3.6 ZONE SYSTEM

The major step in the development of travel demand model and the economic benefits study was
establishing a transportation zoning system. The zone system provides a reasonable representation of the
market area where travel would occur between origins and destinations. 299 traffic zones were
developed for the Purple Line economic analysis study area (see Exhibit 3.9). The zoning system covers
Washington DC, North Virginia, the majority of Maryland counties, as well as Jefferson County of West
Virginia.
Exhibit 3.9: Purple Line Regional Study Area Zoning System
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Zones from 1 to 273 were developed using boundaries of the traffic analysis zones (TAZ) developed by
MWCOG8 and with consideration to zones developed by PB. Where it was reasonable for study purposes
TAZ were aggregated. For zones from 274 to 293 the zoning system was developed using boundaries of
the TAZ by BMC9. Zones from 294 to 299 are developed using county boundaries. In order to establish the
highest possible level of accuracy in regional economic analysis zones in Montgomery and Prince Georges
Counties, especially in the areas located within 5 miles from the Purple Line rail corridor, were developed
without the minimum level of aggregation and often correspond to MWCOG TAZ (see Exhibit 3.10).
Exhibit 3.10: Purple Line Regional Study Area Zoning System Purple Line Corridor Zoom In
3.7 SOCIOECONOMIC DATABASE

In the COMPASS model forecasting travel demand between the models zones require base year
estimates and forecasts of three socioeconomic variables population, employment and household income
for each of the zone in the study area. Socioeconomic database with the data for the base-year (2015)
and the forecast years up to 2040 at five-year intervals was developed using the most recent data, as
well as the latest economic forecasts. To allow for assessment of the financial and operational feasibility of
the system over 25 years, socioeconomic variables were forecasted through the year 2040.
For the Metropolitan Washington region, population and employment projections up to the year 2040
were developed using MWCOG Cooperative forecasts by traffic analysis zones (TAZ)10. For the Baltimore
region (city and county) as well as Harford County population and employment forecasts up to the year
MWCOG - Metropolitan Washington Council of Governments, http://www.mwcog.org
BMC - Baltimore Metropolitan Council, http:/www.baltmetro.org
10
Metropolitan Washington Council of Governments. Information Center. Cooperative Forecasting; Population and Household
Forecasts by Traffic Analysis Zone. http://www.mwcog.org/publications
March 2015
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PURPLE LINE
2040 were developed using BMC Cooperative Forecasts by corresponding transportation analysis
zones11. Projections beyond 2035 are based on 2000-2035 trend lines.
Income projections for zones were developed using multiple sets of data from the official government and
private sources. Among the main datasets are: historic 1969-2008 Bureau of Economic Analysis data on
per capita income by county12; data on average household income and households by county and census
tract from U.S. Census data and Applied Demographic Solutions; U.S. Census American Community Survey
data on aggregate household income and number of households by county13; MWCOG and BMC
population and household projections by TAZ. Bureau of Labor Statistics Consumer Price Index (CPI) data
was used to bring historical average household income data from current into constant 2014$14.
Exhibits 3.11 and 3.12 summarize the base-year and forecast-year socioeconomic data for the Purple Line
study area.
Exhibit 3.11: Purple Line Region Population, Employment and Households Projections
12
10
Million
8
6
4
2
Population
Employment
Household
0
2015
11
2020
2025
2030
2035
2040
Baltimore Metropolitan Council. Cooperative Forecasts by Jurisdiction. Community profiles http://baltometro.org
12
Local Area Personal Income and Employment, Regional Economic Accounts, Bureau of Economic Analysis, U.S. Department of
Commerce, http://www.bea.gov/regional/reis/
13
14
American FactFinder database, http://factfinder.census.gov and MapPoint demographic database.

Bureau of Labor Statistics, http://bls.gov/pub/special.requests, ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
March 2015
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PURPLE LINE
Exhibit 3.12: Purple Line Region Average Household Income Projections
160
Thousand 2014$
140
120
100
80
60
40
20
0
2015
2020
2025
2030
2035
2040
It can be seen that the economy will expand with population annual growing by 0.9%, employment
growing 1.2% and income growing 1.1%.
3.8 TRIP DATABASE

Forecasting the future trends of the travel market within a region hinges upon the ability of the models
used to depict the present travel patterns within the system. Capturing traveling characteristics requires
proper market segmentation and travel demand volumes for each market segment. The trip databases
from PB, MWCOG and BMC are the main data sources for developing the trip database for this study.
The trip databases of PB and MWCOG divide trips based on the local urban travel market characteristics:
Home-based work (HBW)

Home-based other (HBO)
Non-home based (NHB)
Though this classification is used in studying urban auto travel market, it is found that such classification is
insufficient to provide an effective interpretation of traveler behavior for the more complex transit travel
market. TEMS market segmentation/purpose formulation was established to account for the major markets
that would likely be affected by changes in the travel conditions in the study area. For example, business
travelers are typically more concerned with travel time, regularity and availability of service than
personal travelers, shopping and social travelers, who are more concerned with cost. For the purposes of
this study, the desired market segmentation included:
Business travel - all who were on work-related business for one trip-end
Commuter - all who reported home-to-work trips or vice versa
Other (shopping/leisure/social) travelers
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PURPLE LINE
Direct equivalency and interpretive methods were used to convert the MPO trip databases into the
designated TEMS trip purposes. The business purposes were not explicitly defined within the MPOs
purpose splits since the total non-commuter market contained a mixture of business and non-business
markets. The business share and non-business shares were obtained by applying breakout factors to the
total non-commuter market trip segments. This breakout process used MPO trip share data, regional trip
databases and survey information collected to determine the final distribution shares. The conversion of the
urban trip purposes into an inter-urban aggregate trip purpose is illustrated in Exhibit 3.13.
Exhibit 3.13: Purpose Split Equivalency
TEMS Purposes
Business
MPO Equivalents
Interpolated share of NHB, HBO
Commuter
Other
HBW
Interpolated share of NHB and HBO
The conversion of the urban zonal MPO trip files into the inter-urban zonal trip files involved an
aggregation process. This aggregation process resulted in the exclusion of internal trips from the intraurban trip file. These internal trips constitute all trips made within the individual aggregate zones and
represented short distance trips. The exclusion of short-distance trips will not affect the analysis of study
area subject to improvement, because the zones in that area have been developed in a way so that all
trips that use the route would be captured. In addition, the exclusion of short-distance trips will make the
calibrated travel demand model more appropriate for this study due to the inter-urban nature of it.
3.9 CONCLUSION
It was found that the developed socioeconomic and converted transportation databases provided a solid
basis for the evaluation of Economic Rent. The use of these two databases will allow an evaluation of both
demand and supply sides of the economic benefits of the project.
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4 THE TRAVEL DEMAND MODEL AND TRAFFIC FORECASTS

4.1 TRAVEL DEMAND MODEL
The travel demand model used to forecast volume of traffic is based on the COMPASS Demand Model
that was specifically developed for analyzing the statewide traffic flows in Maryland. The COMPASS
Demand Model is a flexible forecasting tool that models the decision-making characteristics of travelers
resulting from changes in the underlying travel network. The model system combines the various
socioeconomic variables, attitudinal parameters, network attributes and origin-destination data, and
calibrate them all against observed traveling distributions and traffic volumes. The COMPASS Demand
Model has two parts: Total Demand Model and Hierarchy Model Split model. The two models are
connected interactively. The Total Demand Model provides a mechanism for assessing overall growth in the
travel market. The role of the Hierarchical Modal Split Model is to estimate relative modal shares, given
the Total Demand Model estimate of the total market.
TOTAL DEMAND MODEL

For the Purple Line Regional Economic Analysis Study, the travel demand models were developed and
calibrated separately for three trip purposes, i.e., Business, Commuter and Other (shopping/leisure/social).
The models were calibrated for 2010 base year data. In applying the models for forecasting, an
incremental approach known as the "pivot point" method is used. By applying model growth rates to the
base data observations, the "pivot point" method is able to preserve the unique travel flows present in the
base data that are not captured by the model variables. Details on how this method is implemented are
described below.
The Travel Demand Model used in this analysis is
Tijp e
0 p
SE
1 p
2 p GCijp
(5)
where:
Tijp = Volume of trips between zones i and j for purpose p
SEijp = Socioeconomic variables for zones i and j for purpose p determined by population,
employment, and average household income of zones i and j
GCijp = Generalized cost of travel for zones i and j for purpose p
B0p, B1p, B2p = Calibration parameters for purpose p
As shown in equation (5), the total number of trips between any two zones for all routes of travel,
segmented by trip purpose, is a function of the socioeconomic characteristics of the zones and the
generalized cost of the transportation system that exists between the two zones. The generalized cost
provides a logical and intuitively sound method of assigning a value to the travel opportunities provided
by the overall transportation system. It is a measure of the quality of the transportation system in terms of
the times, costs, and level of service provided by all routes for a given trip. The Travel Demand Model
equation may be interpreted as meaning that travel between zones will increase as socioeconomic factors
such as population and employment rise or as the utility (or quality) of the transportation system is
improved by providing new facilities and services that reduce travel times and costs. The Travel Demand
Model can then be used to evaluate the effect of changes in both socioeconomic and travel characteristics
on the demand for travel by using the incremental pivot point method described below.
Tijp
Tijp
SEijp f

SE b
ijp
1 p
exp( 2 p ( GCijp
GCijp ) )
March 2015
(6)
22
PURPLE LINE
Where:
Tfijp = Number of Trips between zones i and j for trip purpose p in forecast year f
Tfijp = Number of Trips between zones i and j for trip purpose p in base year b
SEfijp = Socioeconomic variables for zones i and j for trip purpose p in forecast year f
SEbijp = Socioeconomic variables for zones i and j for trip purpose p in base year b
GCfijp = Generalized Cost of the transportation system for zones i to j for trip purpose p in
forecast year f
GCbijp = Generalized Cost of the transportation system for zones i to j for trip purpose p in base
year b
HIERARCHY MODAL SPLIT MODEL

The role of the Hierarchical Modal Split Model is to estimate relative modal shares, given the Total
Demand Model estimate of the total market. The relative modal shares are derived by comparing the
relative levels of service offered by each of the travel modes. The COMPASS Hierarchical Modal Split
Model uses a nested logit structure, which has been adapted to model the intercity modal choices
available in the study area as shown in equation 7. The utility of travel between zones i and j by mode m
for trip purpose p is a function of the generalized cost of travel. The coefficients of this utility function are
based on the MWCOG model split model15. As shown in Exhibit 4.1, two levels of binary choice are used
for auto and transit modes.
Pijmp
exp(U ijmp / )
exp(U ijmp / ) exp(U ijnp / )
(7)
where:
Pijmp
= Percentage of trips between zones i and j by mode m for trip purpose p
Uijmp, Uijnp = Utility functions of modes m and n between zones i and j for trip purpose i
is called the nesting coefficient
Exhibit 4.1 Hierarchical Modal Split Structure

Total Demand
Auto
Transit
15
Based on Figure 6.11 of TPB Travel Forecasting Model, Version 2.3: Specification, Validation, and Users Guide.
http://www.mwcog.org/transportation/activities/models/files/V23_Draft_Jun30_2008_Report.pdf
March 2015
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PURPLE LINE
4.2 SOCIOECONOMIC VARIABLES

The socioeconomic variables in the Travel Demand Model show the impact of economic growth on travel
demand. The COMPASS Model System, in line with most behavioral modeling systems, uses three
variables (population, employment and average household income) to represent the socioeconomic
characteristics of a zone (see Chapter 3). In the development of the original gravity models, these terms
were customarily referred to as production and attraction terms, since they quantify the production and
attraction that specific origins or destinations exert on trip volumes. A more detailed discussion on the
incorporation of these terms in the theory of demand modeling can be found in [17] and [18]
Denote (i,j) as an origin-destination pair, and let Pi, Ei and Ii, be the population, employment, and average
household income of zone i, respectively. These quantities are combined in order to produce socioeconomic
variable SEij that is used in the travel demand model. Different combinations were tested in the calibration
process and it was found that the most theoretically justifiable and empirically stable relationship consists
of the following set of formulae shown in equation (8) through (10):
Business:
SEij Ei E j
Commuter:
SEij
Other:
SEij Pi Pj
Ii I j
(8)
Pi E j Pj Ei I i I j
2
(9)
Ii I j
2
(10)
The Business formula in equation (8) consists of a product of employment in the origin zone, employment in
the destination zone, and the average household income of the two zones. Since business trips are usually
made between places of work, the presence of employment in the formulation is reasonable. The role of
income reflects the fact that higher paid employees make more intercity trips than lower paid employees.
The Commuter formula in equation (9) consists of the product of population in the origin zone and
employment in the destination zone and the product of population in the destination zone and employment
in the origin zone for returning commuter trips. The average household income is included for the Commuter
trip purpose because higher-income people tend to make more auto trips. The Other
(shopping/leisure/social) formula in equation (10) consists of a product of population in the origin zone,
population in the destination zone and the average household income of the two zones. Trips for Other
purposes encompass many types of trips, but the majority is home-based and thus, greater volumes of trips
are expected from zones from higher population, and higher income.
4.3 DEMAND MODEL CALIBRATION

For the purpose of extrapolating a statistically valid distribution of trips in relation to demographic
characteristics and trip disutility, we have assembled a base year database including the base year trip
volume, base year demographic indicators (Population, Employment and Average Household Income), and
generalized costs of travel between zones as obtained from TEMS generalized cost-based networks. We
performed calibrations of the travel demand model defined above in equation (5).
In evaluating the validity of the statistical regression of the calibrations, there are two key statistical
measures: t-statistics and R2. The t-statistics refers to each coefficient to be estimated, while the R2 refers to
the model equation (5). The t-statistics is a measure of the significance of the model coefficients; absolute
values above 2 imply that the variable has significant explanatory power in estimating trip levels. The R2 is
March 2015
24
PURPLE LINE
a statistical measure of the goodness of fit of the model to the data. The higher it is, the better the model
equations represent the distribution of data points. Given the large volume of data, and thus degrees of
freedom, a value of 0.4 and higher is considered a valid result. The calibration results are shown in Exhibit
4.2. It can be seen that, all t-statistics are large and highly significant, and the R2 is good for the travel
demand models calibrated for all trip purposes.
Exhibit 4.2: Calibration Results of Base Travel Demand Model
Purpose
B0
t-stat
B1
t-stat
B2
t-stat
Business
-4.9263
-35
0.4791
69
-0.0561
-127
0.58
Commuter
-19.1426
-206
0.8283
250
-0.0887
-209
0.71
Other
-7.9123
-59
0.3783
81
-0.0542
-110
0.58
These coefficients represent the trip elasticities with respect to the socioeconomic variables and the
generalized cost of travel between zones within the study area. From the coefficients associated with
socioeconomic variables, it can be seen that 1% growth in socioeconomic variables leads to 0.3% ~ 0.7%
increase in travel demand based on trip purpose. For the coefficients associated with generalized cost, 1%
improvement in generalized cost leads to 0.05% ~ 0.08% increase in travel demand based on trip
purpose. These elasticities are in line with travel demand models developed earlier for the travel market
of Maryland.
4.4 TRAVEL DEMAND FORECAST

The calibrated travel demand models shown in Exhibit 4.1 were then used in travel demand forecast with
future year socioeconomic variables and generalized cost network updates by using the incremental
method described in equation (6). The travel demand forecast was performed for the existing Purple Line
infrastructure (No Build) and the Preferred Alternative (PA) the medium investment light rail transit
alternative of the AA/DEIS with several features taken from the high investment alternative, and several
other refinements. PA is a 16-mile light rail line that would extend from Bethesda in Montgomery County to
New Carrollton in Prince George's County, providing a fast and reliable transit service for people moving
east-west in the corridor. It will link both branches of the Washington Metrorail Red Line at Bethesda and
Silver Spring, the Green Line at College Park, and the Orange Line at New Carrollton. The PA would also
connect to all three MARC Train lines, Amtrak, and local bus services. New generalized costs of PA were
computed from the updated network for each purpose, and then they were used to forecast future travel
demand in the study area together with projected socioeconomic variables. Exhibit 4.3 shows year 2030
trips of the corridor by each travel purpose in the study area under the PA option.
Exhibit 4.3: Year 2030 Trip Forecasts
Purpose
2030 Trips
% of Total Trips
Business
10,177
15%
Commuter
16,302
24%
Other
40,512
60%
Total
66,990
100%
March 2015
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PURPLE LINE
5 TEMS ECONOMIC RENT MODEL

5.1 MODEL CALIBRATION
In the Purple Line study area, we have three types of trip purposes p: business, commuter, and other. For
each zone i of the zone system, the accessibility, measured in generalized cost is estimated as follows:
GCi = GCijp * Tijp , i=1,N
(11)
p j
Where:
GCijp - generalized cost of travel from zone i to zone j for purpose p;
Tijp - number of trips from zone i to zone j for purpose p;
N - total number of transportation zones in the network.
The economic rent function in equation (3) shown in Section 2.3 can be transformed into a linear function
(linear regression model) by applying the natural logarithm16 (ln) to both parts of the original economic
rent function:
ln (SEi ) = o + 1 ln (GCi)
(12)
or simply17:
ln (SEi ) = o + 1 ln (GCi)
(13)
Where:
SEi - Economic rent factor (socioeconomic variable) of zone i;
GCi - Weighted generalized cost of travel for all purposes from (to) zone i to (from) other zones in the
zone system (GCi is calculated using formula in equation (11));
o and 1 - Regression coefficients.
In the regression equation (13) logarithm of (SEi) is the criterion (dependent) variable, while logarithm
(GCi) is the predictor (independent) variable. o and 1 are the coefficients of the regression line (o is
the intercept and 1 is the slope). Regression coefficients o and 1 are to be estimated in the regression
model.
16
Natural logarithm is a logarithm to base e of a given number, where e is an irrational constant approximately equal 2.71828183.
The natural logarithm of x is written: ln (x) or ln x. See, for example: http://www.mathwords.com/n/natural_logarithm.htm or
http://www.themathpage.com/aPreCalc/logarithms.htm
17
o = ln ( o )
March 2015
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PURPLE LINE
Application of regression analysis to the equation (13) allowed developing the Purple Line Economic Rent
Model. In this process we established the mathematical relationship between the measure of accessibility
(generalized cost of travel) and the economic rent socioeconomic variables (employment, income density
and residential property value density) for each transportation zone. Exhibit 5.1 through 5.3 shows the
observed values for natural logarithm (LN) of socioeconomic variable (employment, income density and
residential property value density) versus natural logarithm (LN) of generalized costs of travel. The
regression line reflects the relationship between socioeconomic indicators in each transportation zone
included in the zone system and corresponding generalized costs, calculated using formula in equation
(11). By the tight clustering of data points around the regression line, it can be seen that in each case a
very strong relationship was identified. In order to identify the strength of the relationships, statistical
methods were used to analyze the values of the coefficient of determination (R2) and Students t statistics
(t).
LN(Eemployment Density)
Exhibit 5.1: Employment Density as a Function of Accessibility

12
y = -3.30x + 17.67
R2 = 0.50
10
0
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
LN(Generalized Cost)
Exhibit 5.2: Income Density as a Function of Accessibility
LN(Income Density)
24
y = -3.79x + 30.73
R2 = 0.53
22
20
18
16
14
12
10
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
March 2015
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PURPLE LINE
Exhibit 5.3: Residential Property Value Density as a Function of Accessibility
LN(Property Value
Desnsity)
26
24
y = -3.94x + 32.93
R2 = 0.51
22
20
18
16
14
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
The value of the coefficient of determination (R2) shows how much the criterion (dependent) variable is
influenced by predictor variable chosen in the study [19]. In other words, the coefficient of determination
measures how well the model explains the variability in the dependent variable. As a result, the
coefficient of determination illustrates the strength of the relationship between the criterion and predictor
variables.
Performing t-test and calculating Students t statistics [19] for both regression coefficients - 0 (the
intercept) and 1 (the slope), we analyze how significant the regression coefficients are. Assuming a
Normal distribution, a t-statistics that equals two in absolute value is generally accepted as statistically
significant.
Regression statistics for each of the three socioeconomic indicators used in the model, as well as statistical
measures of confidence are presented in Exhibit 5.4.
Exhibit 5.4: Economic Rent Coefficients for Employment, Income Density and
Residential Property Value Density
Intercept
(o)
Tstatistic
s for o
Slope
(1)
Tstatistics
for 1
Coefficient of
Determination
R square
2
(R )
Employment
17.68
24.22
-3.30
-14.63
0.50
Household Income Density
30.73
45.36
-3.79
-18.15
0.53
Residential Property Value

Density
32.93
44.83
-3.94
-17.40
0.51
Economic Rent Factor
It can be seen that the calibration was successful and regression coefficients in each equation were shown
to be significant. This proves that the economic rent profiles are well developed for the Purple Line
corridor. Each equation has highly significant t values and coefficients of determination (R2). This reflects
the strength of the relationship and, given the fact that there is a strong basis for the relationship, shows
March 2015
28
PURPLE LINE
firstly that the socioeconomic variables selected provide a reasonable representation of economic rent,
and, secondly, that generalized cost is an effective measure of market accessibility.
Given the performance of the models, the next step in developing the Economic Rent model is to determine
the change in socioeconomic indicators as a result of accessibility improvement. In order to calculate
change in economic rent factors, we differentiate the economic rent function in equation (13) with respect
to generalized cost. The result of such differentiation is present in equations (14) through (16). It is easy to
see that slopes 1E, 1I and 1PV in each regression equation represent economic rent elasticities. Each
particular elasticity shows how much each economic rent factor changes when generalized cost of travel
changes 18.
Empi = Empi =
IncDi =
RPvDi
Empi
GCi
1E
Empi
GCi
(14)
IncDi
GCi
1I
IncDi
GCi
=
(15)
RPvDi
GCi
1pv
RPvDi
GCi
(16)
Where:
GCi
Empi, -
Weighted generalized cost of zone i;

Employment of zone i;
IncDi
Income density of zone i;
RPvDi
Residential property value density of zone i;
1E 1I 1pv -
Slope coefficients in regression equations.
It is seen from equations (14) through (16) that the relative absolute change in employment ( Empi ),
relative change in household income density ( IncDi ) and relative change in residential property value (
RPvDi ) for each particular zone i equals the relative change in generalized cost GCi multiplied by
GCi
regression coefficient 1E , 1I or 1PV , respectively.
18
More about the role of elasticity in a measurement of economic rent profile change see: [20], [21].
March 2015
29
PURPLE LINE
The value for each slope coefficient (1) is obtained from the corresponding regression equation. Since
area (size - S ) of each transportation zone remains constant, absolute change in household income (
i
Inci
) and residential property value ( RPv ) will be obtained from the following equations:
i
Inci
RPv i
GCi IncD *
IncD i * S i = 1I
Si
i
GCi
=
RPvDi * S i 1Pv
GCi
RPvDi
GCi
(17)
(18)
Si
In order to calculate the impact of accessibility improvement on average household income and average
residential property value we also had to determine how the improvement in accessibility influences the
number of households/housing units that are supported by any given area. To do this we used the
Economic Rent model to predict household density/housing units density that is supported by any given
level of market access. The results of regression analysis are shown in Exhibit 5.5 and 5.6 and economic
rent coefficients are given in Exhibit 5.7. Again, it can be seen that good statistical relationships are
derived with strong t values and coefficients of determination R2.
Exhibit 5.5: Household Density as a Function of Accessibility
LN(HouseHold Density)
12
y = -3.83 + 19.39
R2 = 0.53
10
0
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
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PURPLE LINE
Exhibit 5.6: Housing Units Density as a Function of Accessibility
LN(House Unit Density)
10
9
y = -3.97x + 19.02
R2 = 0.51
8
7
6
5
4
3
2
1
0
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
Exhibit 5.7: Economic Rent Coefficients for Household and Housing Units Density
Economic Rent
Factor
Intercept
(o)
T-statistics
for o
Slope
(1)
Tstatistic
s for 1
Coefficient of
Determination
R square
2
(R )
Household Density
23.39
28.04
-3.83
-17.94
0.53
Housing Units Density
19.02
25.81
-3.97
-17.47
0.51
Change in average household income ( AvInci ) in zone i is calculated as follows:
AvInci
Inc i
,
( Hhi Hhi )
(19)
And change in average residential property value (AvResPvi ) in zone i was calculated as follows:
RPv i
,
( Hui Hui )
(20)
GCi
GCi
Hu
HhDi * S i and Hui 1 *
HuDi * S i
GCi
GCi
(21)
AvResPvi
Where:
Hhi 1
Hh
ResPvi - the change in residential property value in zone i as a result of accessibility improvement
Hhi / Hui - the change in the number of households/housing units in zone i as a result of accessibility
improvement
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31
PURPLE LINE
Hhi / Hui - the base number of households / housing units in zone i

HhDi / HuDi - the base household density / housing units density in zone i
1Hh / 1Hu - the regression coefficients for household/housing units density are obtained from Exhibit 5.7.
Total change in property values is calculated by applying the share of residential property in the
particular county obtained from the statistical source19 to the total residential property value benefits in
this county obtained from the Economic Rent model.
The results of the analysis show that a statistically powerful Economic Rent model is developed that reflects
the responsiveness of the economy to improved transportation access.
5.2 ASSESSMENT OF THE IMPACT OF ECONOMIC GROWTH

A key assumption in the Economic Rent analysis is the impact of economic growth on the economic rent
profile20. Economic growth will cause the economic rent profile to grow as each component that supports
the economic rent profile, land, labor and capital becomes more valuable. As the economy expands, labor
wages increase, so space becomes more valuable, and assets become more expensive. This increase in
factor prices results in a rise in the economic rent profile. If the rise in the economic rent profile is constant
as shown in Exhibit 5.8, then the increase in economic rent associated with an improvement in market
accessibility (i.e., a reduction from GC1 to GC2) for the region is the same. As a result, in Exhibit 5.8 area
A is equal to area B. This means that economic growth will not change the economic rent benefits of the
project. This is the assumption made in this study.
Exhibit 5.8: Impact of Economic Growth. Type 1 - Constant Profile
19
2007 Assessment Ratios Survey Report. State of Maryland Department of Assessment and Taxation. See:
http://www.dat.state.md.us/sdatweb/stats/07rr_rpt.pdf
20
Economic Rent profile as it was defined in Chapter 2 shows the special distribution of the economy in terms of its key factors income, property values and wealth.
March 2015
32
PURPLE LINE
Under most economic conditions, however, the growth in economic rent is not the same over the region and
the profile will not grow proportionally along its entire length. For example, in Exhibit 5.9 there is a
decline in the forecast year economic rent profile at the market center while in the more peripheral areas
(surrounding the market center) there is economic growth, i.e., growth occurs in the suburbs, but not the
market center. In this environment the forecast year benefits, as measured by area A, are smaller than the
base year economic benefits, measured by area B. This would suggest that using the base year economic
rent profile would overstate benefits.
Exhibit 5.9: Impact of Economic Growth. Type 2 - Decrease in Profile
This type of growth, however, does not occur in normal markets, but rather in markets that suffer economic
dislocations. For example, in the United States both Detroit and Buffalo experienced this type of growth
impact when their downtown businesses failed in the 1970s. In Buffalo the issue was the decline of metal
industries, while in Detroit it was more related to social demographic pressures. In this case a forecast of
economic benefits based on a base year assessment will be an overstatement of the benefit. Certainly if
any city market areas along the Purple Line corridor and, particular, the improvement area suffer a major
dislocation (such as experienced by Buffalo) during the life of the project, then the forecasts prepared for
the Purple Line corridor study would be overstated.
Under a normal economic growth situation in which the economy expands for a corridor, the typical impact
is for growth to expand much faster at the market center than in the periphery. This reflects the fact that
the market center provides the greater opportunities for growth in a normal economy and market. For
example, the flood of Hong Kong Chinese into Victoria, Vancouver in the 1990s increased economic
growth and income across the city. However, the impact was most severely felt in the city center with the
development of new high-rise buildings, restaurants and businesses within the downtown area. This
increased the economic profile of the downtown area more that it did in suburban areas. In this case the
measurement of economic benefit using the base year economic profile will understate the size of the
March 2015
33
PURPLE LINE
benefits to be derived from the project. In this case Area A will be larger than area B (see Exhibit 5.10).
Since this is the usual impact of economic growth on a market center, and as our study suggests ongoing
long-term economic growth it is likely that using area B to estimate economic rent benefits understates the
overall economic benefits to be derived from an Economic Rent analysis.
Exhibit 5.10: Impact of Economic Growth. Type 3 - Increase in Profile
As a result, it can be seen in Exhibit 5.11 that there are three conditions that can exist in the forecast year.
Exhibit 5.11: Types of Economic Growth
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PURPLE LINE
Type 1 has constant growth. This means that base and forecast year impacts along the economic
rent are the same, and the base year analysis understates the benefits.
Type 2 has negative growth at the market/city center. This typically results from a dislocation to
the economy due to a loss of the economic base of the region. If this occurs the economic rent
results, particularly in market centers, would be less than those that would be achieved if a base
year economic rent profile is used. Using the base year economic rent profile will overstate the
benefits.
Type 3 has increased positive economic growth at the market center. As a result, the future year
benefits are higher than suggested by measuring the economic rent profile in the base year.
While Type 3 is the normal situation for a city or market center, we have selected Type 1 as the basis for
estimating economic benefits, which we believe is a reasonable and conservative assumption. In most towns
a Type 3 environment will generate benefits greater than those estimated in this study. In one or two towns
it is possible that a Type 2 conditions could prevail and lower economic benefits would be generated from
the project. However, it is worth noting that such a weak performance would not be consistent with the
current economic projections for the Purple Line corridor study used in the Purple Line Regional Economic
Analysis (see Exhibits 3.11 and 3.12).
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PURPLE LINE
6 ECONOMIC RENT RESULTS

6.1 OVERALL ECONOMIC RENT RESULTS
For the Purple Line Economic Impact Study, the Preferred Alternative scenario of 16 mile improvement will
create more than a 27 thousand jobs; will increase property value by 12.8 $ billion and the household
income is estimated to increase by $2.2 billion. Two Maryland counties Montgomery and Prince
Georges Counties and Washington DC, will obtain most economic benefits from the undertaken
transportation improvement21. Overall state, local and federal tax benefits are estimated about $635
million. Exhibit 6.1 represents the overall annual Economic Rent results, while Exhibit 6.2 represents these
results over 30-year life of the project. It should be noted that the increase in employment, income and
property value for the study region represents a growth in their overall economy of between 0.5 and 0.6
percent on current levels (see Exhibit 6.3).
Employment Benefits: 27,183 annual jobs as estimated will be added to the regional economy as a
productivity impact of the transportation project. This is a 0.5 percent increase. These jobs derived from
the Purple Line Preferred Alternative improvement are productivity jobs and not temporary construction
jobs associated with building the project (see Exhibit 6.1). While construction jobs actually result from
transfer payments (relocating government money from one area to another), the jobs estimated in the
frame of Economic Rent model result from productivity improvement increase in the regional Economic
rent profile and attracting new businesses to the region. Assuming 30-year life of the project, the
productivity jobs in the region are estimated to be more than 815,000 person years of work (see Exhibit
6.2). Taking into account that 30-year life of the project is a very conservative estimate of the projects life
(which might be 40 and even 100 years) the real productivity jobs in the area could be doubled.
Income Benefits: $2.2 billion a year or more than $43 billion over 30-year life of the project is estimated
to be obtained in terms of income by the households in the region (see Exhibits 6.1 and 6.2). This
represents a 0.6 percent increase. These income benefits are derived from the increased attractiveness of
the region due to the accessibility improvement. Income benefits result from both, the increase in the
number of households in the area (by 18,382 households) and the increase in the average household
income per household (by over $661 for the study region).
Development Potential (Real Property Value Benefits): The Purple Line project is estimated to provide more
than $12.8 billion in development potential. This represents an increase of 0.6 percent. The total property
value benefits (see Exhibit 6.2) result from the increase of the number of properties in the region as well as
increase in the average value of commercial and residential buildings.
Transfer Payments (Tax Benefits): Transfer payments play an exceptional role in the overall project
evaluation. As shown in Exhibit 6.2, the Purple Line project should bring an expansion of the tax base by
$12.4 billion over 30-year life of the project. Since total costs over the life of the project are estimated at
the level of $1.9 billion22, the total government spending on the project would be far less than the benefits
that the project should return in taxes. As a result the Federal and State government will receive a full
payback directly for their investment over and above the benefits to the local communities.
21
Multiple Economic Rent studies performed by TEMS show that the maximum economic benefits are achieved in the radius of 5
miles from the improvement area. (For example, see [22] or [23] for more details).
22
Purple Line Capital Costs Technical Report, Aug., 2013
March 2015
36
PURPLE LINE
Exhibit 6.1: Overall Annual Economic Rent Benefits for Study Region
Derived from the Purple Line Preferred Alternative
Economic Rent Factor
Benefit
Direct Productivity Benefits:

Employment (Number of Productivity Jobs)
Income (billion 2014 $)
27,183
2.2
Average Household Income (2014 $)
$661
Average Residential Housing Value (2014 $)
$2,150
Number of Households
18,382
Transfer Payments Tax Values:

Federal Income Tax
23
(million 2014$)
State and Local Income Tax

25
Real Property Tax

26
Sales Tax
24
(million 2014$)
((million 2014$)
(million 2014$)
Total Tax Values (million 2014$)
286
153
90
106
635
Exhibit 6.2 Overall Economic Benefits over 30 years Project Life

Benefit Parameter
Discount Rate @3%
Supply Side Benefits:

Income Benefits: (Billions 2014 $)
$43
Employment (Thousands of person years of work)
815
$12.8
Residential- Property Value (Billions 2014 $)

Transfer Payments - Tax Values (Billions 2014 $):
State and Local Income Tax
$3.0
Federal Income Tax
$5.6
Residential Property Tax
$1.8
Sales Tax
$2.1
Total Tax Values
$12.4
23
Federal income tax rate are calculated based on the Tax Foundation document http://www.taxfoundation.org/files/ff231.pdf
24
State and Local income tax benefits are calculated by applying the median of personal income tax rates of Maryland, Virginia,
West Virginia and Washington DC State. The state income tax rates are from Federation of Tax Administrators
http://www.taxadmin.org/fta/rate/ind_inc.pdf . Local income tax only applied to the counties in Maryland and the rates are from
25
Real Property tax benefits are calculated by applying real property tax rates from Property Taxes on Owner-Occupied Housing by
State from Tax Foundation http://www.taxfoundation.org/taxdata/show/24078.html
26
Sales Tax benefits are calculated by applying sales tax rate from Federation of Tax Administrators
http://www.taxadmin.org/fta/rate/sales.pdf
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PURPLE LINE
Exhibit 6.3: Economic Benefits as a % to the Current Levels
Benefit Parameter
Benefit
(Increase from the Current level)
Employment (productivity jobs)
0.5%
Income
0.6%
Residential- Property Value
0.6%
The increase in Economic benefit is less than one years growth for the Baltimore-Washington regional
overall economy, and close to one years growth for Montgomery, Prince Georges counties and DC. This
provides a strong enhancement of the corridors economies.
In terms of the time scale associated with the presented benefits it is likely that these benefits will begin to
be achieved within two to five years after the completion of the Purple Line Preferred Alternative
improvement. The benefits will be proportional to the development of the system routes and schedules. It
should be noted that the benefits of the system are likely to increase over time in line with the growth in the
economy, as the analysis used the base year economic rent profile not the forecast year economic rent
profile. Increases in the economic rent profile will significantly expand these results. If the economy grows
by 50 percent by 2050, the estimated benefits will at least increase accordingly.
6.2 ECONOMIC RENT FOR MONTGOMERY, PRINCE GEORGES AND WASHINGTON DC

An important feature of the Purple Line improvement is its role to the communities especially in
Montgomery and Prince Georges Counties and Washington DC. Successful implementation of the project
will provide a local, regional and national gateway for the communities in these areas. With the
introduction of Purple Line, considerable employment opportunities and development potential will exist.
Such activity will generate both commercial and residential development. Industries looking for a home in
the Purple Line corridor will see it as a good seeding ground for business.
To estimate county level results, the results obtained at a zone level were aggregated to county levels.
Exhibit 6.4 and Exhibit 6.5 show the estimated benefits for Montgomery and Prince Georges Counties in
Maryland and Washington DC major recipients of such benefits. While Exhibit 6.4 presents the absolute
values of estimated benefits, Exhibit 6.5 illustrate the increase in socioeconomic indicators as a percentage
to the current levels.
As shown in Exhibits 6.4 and Exhibit 6.5 both Montgomery and Prince Georges Counties derive significant
benefits from the Purple Line improvements. The zones that include 16-mile improvement area have the
major share of the benefits obtained by their counties. In accordance with the Economic Rent model the
absolute value of each particular type of benefit primarily depends on the strength of the economy and
the level of accessibility improvement resulted from the Purple Line project. Exhibit 6.6 shows the benefits
received in these areas on the map.
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PURPLE LINE
Exhibit 6.4: Economic Rent Analysis by Counties Montgomery, Prince Georges and Washington DC
Employment
(# Jobs)
Household
Income
(Millions 2014 $)
Property Value
(Millions 2014 $)
Mean
Househol
d Income
(2014 $)
Mean
Residential
Household
Value(2014 $)
Montgomery
10,335
1,066
6,062
2,363
7,742
Prince Georges
4,962
468
2,500
1,548
2,306
Washington DC
7,736
311
2,429
454
4,703
Total
23,033
1,845
10,991
County
Exhibit 6.5: Economic Rent Benefits by Community Montgomery, Prince Georges and Washington DC :
Increase from the Current Levels (%)
Benefit (% to the current levels)
County
Employment
Household Income
Property Value
Montgomery
1.9%
2.0%
2.2%
Prince Georges
1.4%
1.4%
1.5%
Washington DC
0.9%
1.1%
1.1%
Exhibit 6.6: Major Recipients of the Economic Benefits in the Purple Line Regional Study Area
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39
PURPLE LINE
The Exhibit 6.7 shows the employment increase on different categories for Montgomery and Prince
Georges Counties and Washington DC (major industries were obtained from NAICS classification27).
Exhibit 6.8 shows the tax benefits received by these areas.
Exhibit 6.7: Employment Benefits by Areas Montgomery, Prince Georges and Washington DC
Employment Increase by Categories
County
Professional Service
Health Care
Accommodation/Food Service
1,818
1,550
785
Prince Georges
499
634
486
Washington, DC
1,503
1,019
1,005
Total
3,820
3,203
2,275
Montgomery
Exhibit 6.8: Tax Benefits by Areas Montgomery, Prince Georges and Washington DC
Tax Benefits (Millions 2014 $)
County
Federal
Income Tax
State +Local
Income Tax
Property Tax
Sales Tax
Montgomery
133.0
79.4
46.7
52.1
Prince Georges
58.5
34.9
19.3
22.9
Washington, DC
49.5
19.4
10.4
15.2
Total
240.9
133.7
76.4
90.3
Exhibits 6.9 and 6.10 illustrate the comparison between socioeconomic indicators for Montgomery and
Prince Georges Counties and Washington DC28. Absolute numbers for population and employment are
higher in Montgomery County than Prince Georges County and Washington DC. This explains why the
Montgomery County receives the most benefits. The current employment of Washington DC is higher than
the Prince Georges County so Washington DC receives more employment benefits, though the increase in
employment rate is less than that of Prince Georges County. As it is shown in Exhibit 6.10, the Median
household income in Montgomery County is 33 percent higher than that in Prince Georges County and
median property value is 65 percent higher than Prince Georges County. This shows that Montgomery
County is wealthier than Prince Georges County and this is the reason for it getting higher economic
benefits than Prince Georges County.
27
The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying
business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business
economy, see for more details: U.S. Census Bureau, http://www.census.gov/eos/www/naics/
28
US Census Bureau, http://www.census.gov; MWCOG, BMC, US Census Bureau State & County QuickFacts
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PURPLE LINE
Exhibit 6.9: 2015 Population and Employment in Montgomery, Prince Georges and Washington DC
Montgomery
Prince George's
Washington DC
1,200,000
1,000,000
800,000
600,000
400,000
200,000
Employment
Population
Exhibit 6.10: 2009-2013 Average Median Household Income and Median Value of Owner-occupied
Housing Units for Montgomery and Prince Georges Counties
$500,000
Montgomery
$400,000
Prince George's
$300,000
$200,000
$100,000
$0
Median Value of
Owner-occupied
Housing Units
Median Household
Income
March 2015
41
PURPLE LINE
As to the difference in levels of transportation interaction, analysis of auto network shows that improvement
in accessibility as a result of the Purple Line improvements is higher for Montgomery County than that of
Prince Georges County and Washington DC. With the light rail option for Montgomery County, average
relative improvement in accessibility (measured in relative change in weighted generalized costs29) is 1.1
percent, while for Prince Georges County the corresponding improvement is 0.8 percent and DC is 0.6
percent.
As we can see from this analysis, difference in the economic benefits estimated for Montgomery and Prince
Georges Counties and Washington DC are mainly explained by the socioeconomic characteristics of the
counties, and the level of improved connectivity to other areas using Purple Line project.
29
Relative improvement in accessibility in each zone is measured as the fraction between the absolute change in generalized costs
(after implementation of the improvements) and the base generalized costs (before their implementation).
March 2015
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PURPLE LINE
7 INPUT-OUTPUT ANALYSIS: CONSTRUCTION OF THE

PURPLE LINE
From a regional, state and local perspective, the Purple Line construction program will have significant
economic and financial impact in terms of short term job creation, income and output. Regional input-output
(I-O) multipliers, which account for inter-industry relationships within specific regions, have proven to be a
very potent and useful tool for evaluating economic stimulus of construction expenditures in a region.
7.1 SCOPE OF EVALUATION

In order to understand the economic impact of the Purple Line project construction on Montgomery and
Prince Georges Counties and Washington DC, an analysis was made of the temporary supply-side
benefits that are derived by the analyzed region. This includes an assessment of both the temporary direct
and indirect jobs created by construction of the project, as well as income and economic output.
An input-output methodology was used to identify the number of temporary jobs, both direct and indirect,
that will be created in Montgomery and Prince Georges Counties and Washington DC during each of 5
years of construction of the project. The input-output analysis measures the short-term economic stimuli that
are created in this region as a result of the additional construction spending on the project. In our study we
assume that Federal government will fund the capital cost of the project. As a result we will measure the
influence of construction spending on output, job creation and correspondent income. Although an FHWA
cost-benefit analysis treats the capital investment as a cost rather than as a benefit of the project,
according to BEA methodology the construction cost creates job and income benefits to Montgomery and
Prince Georges Counties and Washington DC, because the money is spent in its states rather than
elsewhere.
7.2 INPUT-OUTPUT METHODOLOGY

In the 1970s, the Bureau of Economic Analysis (BEA) developed a method for estimating regional I-O
multipliers known as Regional Industrial Multiplier System (RIMS) In the 1980s, BEA completed an
enhancement of RIMS, known as RIMS II, the Regional Input-Output Modeling System30. A second edition of
the RIMS II handbook based on more recent data and an improved methodology was issued in 1992. A
third edition was made available in 1997.
The main underpinning of the RIMS II methodology is an accounting framework known as an I-O matrix,
which is discussed in detail in the Appendix A. The I-O matrix is an exhibit that shows the distribution of
inputs purchased and outputs sold for each industry. There are two main data sources for the I-O matrix in
RIMS II. First is the BEAs national I-O exhibit, which provides the input and output structure of nearly 500
detailed U.S. industries (in accordance with NAICS codes) and of 20 aggregated industries. Second, is
represented by BEAs regional economic accounts, used to adjust the national I-O exhibit in order to reflect
a regions industrial composition and trading patterns.
The fundamental idea behind the input-output model is that of the multiplier effect, whereby new money
entering the economy has a ripple effect with spillover benefits for the entire community through direct and
indirect impacts. To cite an example, when the government buys $10 billion worth of goods from a major
industry, the purchase (notwithstanding the immediate effect of raising employment and profits in that
For a detailed discussion on the data sources and methods underlying the use of RIMS II, the Reader is referred to the technical
Appendix A.
30
March 2015
43
PURPLE LINE
industry) has repercussions leading to higher overall incomes, which in turn lead to even higher demand,
thereby triggering a positive feedback loop. The total impact on the quantity of goods and services
demanded is much larger than the initial impulse felt from higher government spending. The factor by
which the initial impulse is multiplied will be determined by the individuals marginal propensity to consume:
the fraction of extra income that a household consumes rather than saves.
Exhibit 7.1, 7.2 and 7.3 illustrate how a single dollar of additional spending on auto production, for
example, benefits the plastics, electricity, instruments and rubber industries, among others31. As shown in
the Exhibit 7.1, a single dollar spent on auto production translates into 14 cents spent on plastics, 5 cents
on electricity, 11 cents on instruments, 7 cents on rubber, 21 cents on local industries, 17 cents in earnings
for local employees and 25 cents leakage. In the second ripple shown in Exhibit 7.2, the 14 cents earned
by the plastics industry feeds 9 cents to the chemicals industry, 2 cents earnings for local employees and 3
cents of leakage. Similarly, in the third Exhibit 7.3, 21 cents spent on other local industries re-enters the
economy in the form of 1 cent for utilities, 5 cents on autos, 4 cents for other local industries, and 4 cents
income for local employees and 7 cents leakage.
It should be noted that depending upon the type of project and its location, the multiplier effects from the
additional investment, jobs, income and workers spending decisions would differ. This is because the
characteristics of the local economy (i.e., the types of industry present) determines exactly how much extra
impact an investment will generate in that region.
7.3 APPLICATION OF REGIONAL INPUT-OUTPUT MODELING SYSTEM

The main advantage of RIMS II is that multipliers can be estimated for any region composed of one or
more counties, and for any industry or group of industries in the national I-O exhibit. In order to obtain
multipliers especially for the Purple Line corridor a description of the region was provided to BEA. The
RIMS II multipliers were calculated for the Montgomery and Prince Georges Counties and Washington DC.
A systematic analysis of the regional economic benefits that will be accrued from the Purple Line
transportation project calls for detailed information about inter-industry relationships not only at County
level in general, but in the different parts of the Purple Line corridor region. Using Capital cost of 1.9
billion with construction cost of 1.7 billion (excluding vehicles cost from Capital cost), we calculate the
economic impact of construction spending on output, income and job creations in different parts of the
Purple Line corridor. Because the analysis is based on cash flows, we can identify only the employment
generated during construction period.
31
The given example illustrates the methodology of RIMS II multiplier calculations made by BEA and does not relate to Midwest
region.
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PURPLE LINE
PRELIMINARY ECONOMIC IMPACT STUDY
Exhibit 7.1: Multiplier Mechanism 1
S tart
Plastics
Electr icity
$0.1 4 of auto
industry
spending on
plastics ree nters:
P lastics
$0.14
E lectric ity
$0.05
$0.01
Chemica ls
$0.09
Autos
$0.05
Instruments
$0.11
Rubbe r
$0.07
Other Local
Industries
$0.21
$0.04
Local E mployees
Leak age
Chemicals
Au tos
$1 of a dditional
spendi ng on
auto production
initiates
s pendi ng on:
In str umen ts
R ub ber
O ther L ocal
In du str ies
$ 0.21 of a uto
indus try
s pe nding on
other loc al
industries reenters :
$0.17
$0.02
$0.04
$0.25
$0.03
$0.04
March 2015
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PURPLE LINE

Start
Plastics
$0.14 of auto
industry
spending on
plastics reenters:
Plastics
$0.14
Electricity
$0.05
$0.01
Chem icals
$0.09
Autos
$0.05
Instrum ents
$0.11
Rubber
$0.07
O ther Local
Industries
$0.21
$0.04
Local Em ployees
Leakage
Electricity
Chem icals
Autos
$1 of additional
spending on
auto production
initiates
spending on:
Instrum ents
Rubber
Other Local
Industries
$0.21 of auto
industry
spending on
other local
industries reenters:
$0.17
$0.02
$0.04
$0.25
$0.03
$0.04
March 2015
46
PURPLE LINE
Start
Plastics
$0.14 of auto
industry
spending on
plastics reenters:
Plastics
$0.14
Electricity
$0.05
$0.01
Chemicals
$0.09
Autos
$0.05
Instruments
$0.11
Rubber
$0.07
Other Local
Industries
$0.21
$0.04
Local Employees
$0.17
$0.02
$0.04
Leakage
$0.25
$0.03
$0.07
Electricity
Chemicals
Autos
$1 of additional
spending on
auto production
initiates
spending on:
March 2015
Instruments
Rubber
Other Local
Industries
$0.21 of auto
industry
spending on
other local
industries reenters:
47
PURPLE LINE
7.4 RESULTS
Using RIMS II output and employment multipliers for annual capital infusion in the construction industry over
5-year construction period we estimate how different industries are expected to benefit from the Purple
Line project in terms of output and jobs creation. The capital cost is taken as $1.9 billion with construction
cost of $1.7 billion for a five-year period in 2014 dollars32.
Following the methodology developed by BEA for RIMS II we calculate economic impacts on output, income
and job creation for each stage (year) of construction period for Montgomery and Prince Georges
Counties and Washington DC. Exhibits 7.4 through 7.6 show the economic impact on job creations, output,
and income by county during the construction period. As seen in Exhibit 7.4 through 7.6, 53% of temporary
jobs, 37% of output and 53% of income are created in Montgomery County, 34% of temporary jobs,
35% of output and 33% of income are created in Prince Georges County, and 14% of temporary jobs,
29% of output and 15% of income are created in Washington DC.
Exhibits 7.7 through 7.15 show the economic impact on temporary job creations, output, and income by
Industry for Montgomery and Prince Georges Counties and Washington DC. We can see from Exhibit 7.7
through 7.15, construction industry itself will benefit from project implementation more than other industries.
It will obtain around 60% of temporary jobs and 65% of output created in the Montgomery and Prince
Georges Counties, and 77% of temporary jobs and 82% of output created in Washington DC.
Exhibit 7.4: Temporary Job Creation Person Years
Year 1
Year 2
Year 3
Year 4
Year 5
Average
# of Jobs
Total Person
Years of Work
Montgomery
County
2,134
2,134
2,134
2,134
2,134
2,134
10,670
Prince Georges
County
1,357
1,357
1,357
1,357
1,357
1,357
6,785
Washington DC
557
557
557
557
557
557
2,785
4,048
4,048
4,048
4,048
4,048
4,048
20,240
Total
Exhibit 7.5: Gross Regional Product (Millions 2014 $)
Montgomery County
Prince Georges
County
Washington DC
Total
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Output
$511.80
$511.80
$511.80
$511.80
$511.80
$2,558.98
$486.78
$486.78
$486.78
$486.78
$486.78
$2,433.89
$403.14
$403.14
$403.14
$403.14
$403.14
$2,015.70
$1,401.71
$1,401.71
$1,401.71
$1,401.71
$1,401.71
$7,008.57
32
According to Purple Line FEIS, the total project capital cost is 1.847 billion in 2012 dollars. By multiplying CPI factors from Bureau
of Labor Statistics, it is converted to 2014 dollars.
March 2015
48
PURPLE LINE
Exhibit 7.6: Personal Income (Millions 2014 $)

Year 1
Year 2
Year 3
Year 4
Year 5
Montgomery
County
Average
Income
Total
Income
$103.19
$103.19
$103.19
$103.19
$103.19
$103.19
$515.94
Prince Georges
County
$64.05
$64.05
$64.05
$64.05
$64.05
$64.05
$320.27
$28.90
$28.90
$28.90
$28.90
$28.90
$28.90
$144.48
$196.14
$196.14
$196.14
$196.14
$196.14
$196.14
$980.68
Washington DC
Total
Besides construction industry, noteworthy employment gains in Montgomery County will be mainly in retail
trade (9% of new temporary jobs), professional, scientific and technical services (6%), administrative and
management services (4%), whereas in Prince Georges County besides construction industry, retail trade
(10%), professional, scientific and technical services (4%), administrative and management services (4%).
In Washington DC, besides construction, noteworthy employment gains will be mainly in professional,
scientific and technical services (7%), administrative and management services (5%), and retail trade (2%).
(See Exhibit 7.7 through 7.9)
Among the industries that are estimated to receive significant share of output besides construction industry,
we can point out on professional, scientific and technical services (6% in Montgomery County, 5% in Prince
Georges County and 7% in Washington DC), real estate and rental and leasing (5% in Montgomery
County, 4% in Prince Georges County and 2% in Washington DC), retail trade (5% in Montgomery
County, and 5% in Prince Georges County), finance and insurance (4% in Montgomery County), and
manufacturing (3% in Prince Georges County). (See Exhibit 7.10 through 7.12)
As seen in Exhibit 7.13 through 7.15, among the industries that are estimated to receive significant income
besides construction industry, we can point out on professional, scientific and technical services (9% in
Montgomery County, 7% in Prince Georges County and 11% in Washington DC), and retail trade (5% in
Montgomery County, 6% in Prince Georges County and 1% in Washington DC).
Exhibit 7.7: Economic Impact by Industry Grouping - Temporary Job Creation in Montgomery County
NAICS Descriptions
23 Construction
Year Year Year Year Year

1
2
3
4
5
Average
# of jobs
1288 1,288 1,288 1,288 1,288
Total Person
years of work
1,288
6,440
44 Retail trade
192
192
192
192
192
192
960
54 Professional, scientific, and technical services
130
130
130
130
130
130
650
56 Administrative and waste management services
80
80
80
80
80
80
400
62 Health care and social assistance
77
77
77
77
77
77
385
53 Real estate and rental and leasing
74
74
74
74
74
74
370
52 Finance and insurance
57
57
57
57
57
57
285
72 Food services and drinking places
54
54
54
54
54
54
270
March 2015
49
PURPLE LINE
46
46
46
46
46
46
230
42 Wholesale trade
24
24
24
24
24
24
120
31 Manufacturing
23
23
23
23
23
23
115
51 Information
23
23
23
23
23
23
115
48 Transportation and warehousing*
15
15
15
15
15
15
75
55 Management of companies and enterprises
10
10
10
10
10
10
50
71 Arts, entertainment, and recreation
10
10
10
10
10
10
50
72 Accommodation
45
61 Educational services
40
H0 Households
40
21 Mining
20
11 Agriculture, forestry, fishing, and hunting
22 Utilities*
81, S0 Other services*
TOTAL
2,134 2,134 2,134
2,134
2,134
March 2015
10,670
2,134
50
PURPLE LINE
Exhibit 7.8: Economic Impact by Industry Grouping - Temporary Job Creation in Prince Georges County
NAICS Descriptions

1
2
3
4
5
Average
# of jobs
Total Person
years of work
23
Construction
843
843
843
843
843
843
4,215
44
133
133
133
133
133
133
665
58
58
58
58
58
58
290
56
Retail trade
Professional, scientific, and technical
services
Administrative and waste management
services
52
52
52
52
52
52
260
53
Real estate and rental and leasing
38
38
38
38
38
38
190
72
Food services and drinking places
35
35
35
35
35
35
175
48
Transportation and warehousing*
32
32
32
32
32
32
160
62
Health care and social assistance
31
31
31
31
31
31
155
81, S0
Other services*
30
30
30
30
30
30
150
31
Manufacturing
26
26
26
26
26
26
130
42
Wholesale trade
19
19
19
19
19
19
95
52
Finance and insurance
18
18
18
18
18
18
90
51
Information
11
11
11
11
11
11
55
61
Educational services
40
71
Arts, entertainment, and recreation
30
H0
Households
30
72
Accommodation
20
21
Mining
15
11
Agriculture, forestry, fishing, and hunting
10
22
Utilities*
55
Management of companies and enterprises 1
1,357
1,357
1,357
6,785
54
TOTAL
1,357 1,357 1,357
March 2015
51
PURPLE LINE
Exhibit 7.9: Economic Impact by Industry Grouping - Temporary Job Creation in Washington DC
NAICS Descriptions

1
2
3
4
5
Average
# of jobs
Total Person
years of work
430
430
430
430
430
430
2,150
37
37
37
37
37
37
185
26
26
26
26
26
26
130
44 Retail trade
13
13
13
13
13
13
65
10
10
10
10
10
10
50
45
30
51 Information
20
20
20
72 Accommodation
15
31 Manufacturing
10
42 Wholesale trade
10
10
10
10
H0 Households
21 Mining
22 Utilities*
23 Construction
54 services
56 services
TOTAL
557
557
557
557
557
2,785
557
March 2015
52
PURPLE LINE
Exhibit 7.10: Economic Impact by Industry Grouping - Gross Regional Product in Montgomery County
(Millions 2014 $)
NAICS Descriptions
23 Construction
54 services
Year
1
Year
2
Year
3
Year
4
Year
5
$332.63 $332.63 $332.63 $332.63 $332.63
Total
Output
$1,663.13
$31.48
$31.48
$31.48
$31.48 $31.48
$157.40
$26.11
$26.11
$26.11
$26.11 $26.11
$130.56
44 Retail trade
$23.92
$23.92
$23.92
$23.92 $23.92
$119.62
$20.48
$20.48
$20.48
$20.48 $20.48
$102.39
51 Information
$12.43
$12.43
$12.43
$12.43 $12.43
$62.13
$11.10
$11.10
$11.10
$11.10 $11.10
$55.50
31 Manufacturing
$9.54
$9.54
$9.54
$9.54
$9.54
$47.72
42 Wholesale trade
56 services
$9.21
$9.21
$9.21
$9.21
$9.21
$46.06
$7.95
$7.95
$7.95
$7.95
$7.95
$39.76
$7.79
$7.79
$7.79
$7.79
$7.79
$38.94
$4.41
$4.41
$4.41
$4.41
$4.41
$22.04
$4.27
$4.27
$4.27
$4.27
$4.27
$21.37
$2.85
$2.85
$2.85
$2.85
$2.85
$14.25
21 Mining
$2.65
$2.65
$2.65
$2.65
$2.65
$13.25
72 Accommodation
$1.66
$1.66
$1.66
$1.66
$1.66
$8.28
22 Utilities*
$1.19
$1.19
$1.19
$1.19
$1.19
$5.96
$1.03
$1.03
$1.03
$1.03
$1.03
$5.14
$0.89
$0.89
$0.89
$0.89
$0.89
$4.47
$0.20
$0.20
$0.20
$0.20
$0.20
$0.99
H0 Households
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$511.80 $511.80 $511.80 $511.80 $511.80
$2,558.98
TOTAL
March 2015
53
PURPLE LINE
Exhibit 7.11: Economic Impact by Industry Grouping - Gross Regional Product in Prince Georges County
(Millions 2014 $)
NAICS Descriptions
23 Construction
54 services
Year
1
Year
2
Year
3
Year
4
Year
5
$332.49 $332.49 $332.49 $332.49 $332.49
Total
Output
$1,662.47
$25.88
$25.88
$25.88
$25.88
$25.88
$129.40
44 Retail trade
$23.39
$23.39
$23.39
$23.39
$23.39
$116.97
$19.82
$19.82
$19.82
$19.82
$19.82
$99.08
31 Manufacturing
$16.40
$16.40
$16.40
$16.40
$16.40
$82.01
42 Wholesale trade
$12.59
$12.59
$12.59
$12.59
$12.59
$62.96
$9.87
$9.87
$9.87
$9.87
$9.87
$49.37
51 Information
$8.85
$8.85
$8.85
$8.85
$8.85
$44.24
$6.99
$6.99
$6.99
$6.99
$6.99
$34.96

56 services
$6.63
$6.63
$6.63
$6.63
$6.63
$33.14
$6.26
$6.26
$6.26
$6.26
$6.26
$31.31
$6.16
$6.16
$6.16
$6.16
$6.16
$30.82
$3.58
$3.58
$3.58
$3.58
$3.58
$17.89
$2.02
$2.02
$2.02
$2.02
$2.02
$10.11
22 Utilities*
$1.66
$1.66
$1.66
$1.66
$1.66
$8.28
21 Mining
$1.56
$1.56
$1.56
$1.56
$1.56
$7.79
$1.06
$1.06
$1.06
$1.06
$1.06
$5.30
72 Accommodation
$0.73
$0.73
$0.73
$0.73
$0.73
$3.65
$0.60
$0.60
$0.60
$0.60
$0.60
$2.98
$0.23
$0.23
$0.23
$0.23
$0.23
$1.16
H0 Households
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
TOTAL
$486.78
$486.78 $486.78 $486.78 $486.78
March 2015
$2,433.89
54
PURPLE LINE
Exhibit 7.12: Economic Impact by Industry Grouping - Gross Regional Product in Washington DC (Millions
2014 $)
NAICS Descriptions
23 Construction
54 services
Year
1
Year
2
Year
3
Year
4
Year
5
Total
Output
$331.53 $331.53
$331.53 $331.53 $331.53
$1,657.66
$26.44 $26.44
$26.44 $26.44 $26.44
$132.22
$9.84
$9.84
$9.84
$9.84
$9.84
$49.21
51 Information
$6.36
$6.36
$6.36
$6.36
$6.36
$31.81

56 services
$5.87
$5.87
$5.87
$5.87
$5.87
$29.33
$4.31
$4.31
$4.31
$4.31
$4.31
$21.54
44 Retail trade
$3.51
$3.51
$3.51
$3.51
$3.51
$17.56
$2.35
$2.35
$2.35
$2.35
$2.35
$11.76
$2.29
$2.29
$2.29
$2.29
$2.29
$11.43
31 Manufacturing
$2.25
$2.25
$2.25
$2.25
$2.25
$11.27
42 Wholesale trade
$2.05
$2.05
$2.05
$2.05
$2.05
$10.27
$1.49
$1.49
$1.49
$1.49
$1.49
$7.46
$1.23
$1.23
$1.23
$1.23
$1.23
$6.13
72 Accommodation
$1.06
$1.06
$1.06
$1.06
$1.06
$5.30
22 Utilities*
$0.89
$0.89
$0.89
$0.89
$0.89
$4.47
$0.73
$0.73
$0.73
$0.73
$0.73
$3.65
$0.46
$0.46
$0.46
$0.46
$0.46
$2.32
$0.46
$0.46
$0.46
$0.46
$0.46
$2.32
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
21 Mining
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
H0 Households
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
TOTAL
$403.14
$403.14
$403.14
$403.14 $403.14
March 2015
$2,015.70
55
PURPLE LINE
Exhibit 7.13: Economic Impact by Industry Grouping - Income in Montgomery County
(Millions 2014 $)
NAICS Descriptions
23 Construction
54 services
Year
1
Year
2
$66.70 $66.70
Year
3
Year
4
Year
5
Average
Income
Total
Income
$66.70
$66.70
$66.70
$66.70
$333.52
$9.41
$9.41
$9.41
$9.41
$9.41
$9.41
$47.05
44 Retail trade
$5.40
$5.40
$5.40
$5.40
$5.40
$5.40
$27.01
$3.98
$3.98
$3.98
$3.98
$3.98
$3.98
$19.88

56 services
$3.71
$3.71
$3.71
$3.71
$3.71
$3.71
$18.56
$2.05
$2.05
$2.05
$2.05
$2.05
$2.05
$10.27
$1.86
$1.86
$1.86
$1.86
$1.86
$1.86
$9.28
42 Wholesale trade
$1.76
$1.76
$1.76
$1.76
$1.76
$1.76
$8.78
$1.49
$1.49
$1.49
$1.49
$1.49
$1.49
$7.46
51 Information
$1.46
$1.46
$1.46
$1.46
$1.46
$1.46
$7.29
31 Manufacturing
$1.36
$1.36
$1.36
$1.36
$1.36
$1.36
$6.79
$1.03
$1.03
$1.03
$1.03
$1.03
$1.03
$5.14
$0.99
$0.99
$0.99
$0.99
$0.99
$0.99
$4.97
$0.63
$0.63
$0.63
$0.63
$0.63
$0.63
$3.15
21 Mining
$0.36
$0.36
$0.36
$0.36
$0.36
$0.36
$1.82
72 Accommodation
$0.30
$0.30
$0.30
$0.30
$0.30
$0.30
$1.49
$0.27
$0.27
$0.27
$0.27
$0.27
$0.27
$1.33
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.99
22 Utilities*
$0.10
$0.10
$0.10
$0.10
$0.10
$0.10
$0.50
H0 Households
$0.10
$0.10
$0.10
$0.10
$0.10
$0.10
$0.50
$0.03
$0.03
$0.03
$0.03
$0.03
$0.03
$0.17
TOTAL
$103.19 $103.19 $103.19 $103.19 $103.19
March 2015
$515.94
$103.19
56
PURPLE LINE
Exhibit 7.14: Economic Impact by Industry Grouping - Income in Prince Georges County
(Millions 2014 $)
NAICS Descriptions
23 Construction
Year
1
Year
2
$43.64 $43.64
Year
3
Year
4
Year
5
Average
Income
Total
Income
$43.64
$43.64
$43.64
$43.64
$218.21
54 Professional, scientific, and technical services
$4.18
$4.18
$4.18
$4.18
$4.18
$4.18
$20.88
44 Retail trade
$3.74
$3.74
$3.74
$3.74
$3.74
$3.74
$18.72
31 Manufacturing
$1.39
$1.39
$1.39
$1.39
$1.39
$1.39
$6.96
56 Administrative and waste management services
$1.39
$1.39
$1.39
$1.39
$1.39
$1.39
$6.96
42 Wholesale trade
$1.36
$1.36
$1.36
$1.36
$1.36
$1.36
$6.79
$1.36
$1.36
$1.36
$1.36
$1.36
$1.36
$6.79
$1.29
$1.29
$1.29
$1.29
$1.29
$1.29
$6.46
$1.16
$1.16
$1.16
$1.16
$1.16
$1.16
$5.80
$1.13
$1.13
$1.13
$1.13
$1.13
$1.13
$5.63
$0.96
$0.96
$0.96
$0.96
$0.96
$0.96
$4.80
51 Information
$0.73
$0.73
$0.73
$0.73
$0.73
$0.73
$3.65
$0.66
$0.66
$0.66
$0.66
$0.66
$0.66
$3.31
$0.27
$0.27
$0.27
$0.27
$0.27
$0.27
$1.33
21 Mining
$0.23
$0.23
$0.23
$0.23
$0.23
$0.23
$1.16
$0.13
$0.13
$0.13
$0.13
$0.13
$0.13
$0.66
72 Accommodation
$0.13
$0.13
$0.13
$0.13
$0.13
$0.13
$0.66
22 Utilities*
$0.10
$0.10
$0.10
$0.10
$0.10
$0.10
$0.50
$0.10
$0.10
$0.10
$0.10
$0.10
$0.10
$0.50
H0 Households
$0.07
$0.07
$0.07
$0.07
$0.07
$0.07
$0.33
$0.03
$0.03
$0.03
$0.03
$0.03
$0.03
$0.17
TOTAL
$64.05
$64.05
$64.05
$64.05
$64.05
March 2015
$320.27
$64.05
57
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Exhibit 7.15: Economic Impact by Industry Grouping - Income in Washington DC
(Millions 2014 $)
NAICS Descriptions
23 Construction
54 services
56 services
Year
1
Year
2
Year
3
Year
4
Year
5
$22.27 $22.27 $22.27 $22.27 $22.27
Average
Income
Total
Income
$22.27
$111.34
$3.28
$3.28
$3.28
$3.28
$3.28
$3.28
$16.40
$0.70
$0.70
$0.70
$0.70
$0.70
$0.70
$3.48
44 Retail trade
$0.40
$0.40
$0.40
$0.40
$0.40
$0.40
$1.99
$0.40
$0.40
$0.40
$0.40
$0.40
$0.40
$1.99
51 Information
$0.33
$0.33
$0.33
$0.33
$0.33
$0.33
$1.66
$0.27
$0.27
$0.27
$0.27
$0.27
$0.27
$1.33
$0.27
$0.27
$0.27
$0.27
$0.27
$0.27
$1.33
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.99
31 Manufacturing
$0.13
$0.13
$0.13
$0.13
$0.13
$0.13
$0.66
42 Wholesale trade
$0.13
$0.13
$0.13
$0.13
$0.13
$0.13
$0.66
$0.13
$0.13
$0.13
$0.13
$0.13
$0.13
$0.66
72 Accommodation
$0.10
$0.10
$0.10
$0.10
$0.10
$0.10
$0.50
$0.07
$0.07
$0.07
$0.07
$0.07
$0.07
$0.33
$0.07
$0.07
$0.07
$0.07
$0.07
$0.07
$0.33
$0.07
$0.07
$0.07
$0.07
$0.07
$0.07
$0.33
22 Utilities*
$0.03
$0.03
$0.03
$0.03
$0.03
$0.03
$0.17
$0.03
$0.03
$0.03
$0.03
$0.03
$0.03
$0.17
H0 Households
$0.03
$0.03
$0.03
$0.03
$0.03
$0.03
$0.17
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
21 Mining
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
TOTAL
$28.90
$28.90
$28.90
$28.90
$28.90
March 2015
$144.48
$28.90
58
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The Input-Output analysis shows that the Purple Line Project will have a general sizeable impact on the
economies of Montgomery and Prince Georges Counties and Washington DC. The results are summarized
in Exhibit 7.4 through 7.15. Since contractors on the project will buy materials and services from other
Purple Line corridor region businesses, the RIMS II analysis predicts a multiplier effect on the initial
construction expenditure of $1.7 billion. All Purple Line corridor region industries are expected to benefit
by approximately USD $7 billion and over 20,240 person-years of work during the construction period.
Over a five-year construction period, this would be equivalent to adding approximately 4,048 temporary
jobs annually in Montgomery and Prince Georges Counties and Washington DC, occurring as a direct
result of the construction expenditures alone.
It should be noted that depending upon the type of project and its location, the multiplier effects from the
additional investment, jobs, income and workers spending decisions would differ. This is because the
characteristics of the local economy determines exactly how much extra impact an investment will
generate.
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8 CONCLUSION
The improvement of the Purple Line Preferred Alternative will provide an integrating force for the
communities in Montgomery and Prince Georges Counties and Washington DC. It will also support the
opportunities to fundamentally change the character of business in the area while expanding the level of
social, personal and tourist interaction. The project will create a new business environment and will ensure
the stability of existing service, transportation and manufacturing industries, while fostering the growth of
new small businesses in the area because of the improved access to smaller communities along the Purple
Line corridor.
Economic Rent: The long-term supply side benefits are considerable because a very high level of east-west
access is being provided between the communities along the Purple Line corridor and because the corridor
has a very high level of economic vitality. The Economic Rent analysis shows supply side benefits for the
economy of study region.
1.0 to 2.2 percent growth in the economy of Montgomery and Prince Georges Counties and
Washington DC.
23,033 long-term person years of work per year for Montgomery and Prince Georges Counties
and Washington DC.
Increase in income to local households of $2.2 billion per year or over $40 billion over the life of
the project (overall).
The property value increase, assuming full advantage is taken by local communities of the Purple
Line, is $12.8 billion (overall) or $11.0 billion for Montgomery and Prince Georges Counties and
Washington DC.
Total expected tax benefits (Federal, State, Local and Sales Tax) from the Purple Line project
implementation are in the range of at least $635 million per year (overall) or $541 million for
Montgomery and Prince Georges Counties and Washington DC.
The development of the Purple Line Preferred Alternative will also result in significant economic impact in
Montgomery and Prince Georges Counties and Washington DC during the construction of the project.
Input-Output Analysis: The regional use of federal construction dollars to build the system will generate a
substantial economic impact in the region. During the construction period it will
Create 20,000 person years of work or the equivalent of 4,000 full-time jobs annually during the
5-year construction period (this includes construction plus other industry jobs) for Montgomery and
Prince Georges Counties and Washington DC.
Increase in income in Montgomery and Prince Georges Counties and Washington DC by $980
million during the 5-year construction period.
Increase in regional output in these two counties and Washington DC by 7.0 billion during the 5year construction period.
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APPENDIX A:
DATA SOURCES AND METHODS FOR RIMS II
Most regional economists agree that the most accurate method of estimating a regional input-output (I-O)
model is to survey the businesses in a region in order to determine which goods and services are purchased
by industries in the region and whether these goods and services are purchased from other industries in the
region or from industries in other regions. However, because these surveys are costly, few regional I-O
models in the United States are based on survey, or primary source, data.
As a result, the estimation of the regional input-output modeling system (RIMS II), like that of most regional
I-O models, is based on data from the national I-O accounts and other secondary data. It is assumed that
the national I-O data can be used to represent the composition of inputs purchased in the region. The
national data are then adjusted by regional data, because the industries in a region cannot obtain all of
their inputs from within the region.
The RIMS II model and its multipliers are prepared in three major steps.33 First, an adjusted national
industry-by-industry direct requirements table is prepared. Second, the adjusted national table is used to
prepare a regional industry-by-industry direct requirements table.34 Third, a regional industry-by-industry
total requirements table is prepared, and the multipliers are derived from this table.
A.1 THE ADJUSTED NATIONAL DIRECT REQUIREMENTS TABLE

The adjusted national industry-by-industry direct requirements table is derived from the make and use
tables in BEAs 1987 benchmark I-O accounts for the U.S. economy.35 The use table is adjusted so that it
includes only the use of domestically produced commodities. The data in a use table for imported
commodities are subtracted from the data in the total commodity use table.
After this adjustment, a national industry-by-industry direct requirements table is prepared by means of
standard I-O procedures.36 An industry-share matrix, which shows each industrys share of the production
of a commodity, is calculated by dividing each entry in each column of the make table by the respective
column total. Next, a commodity-by-industry direct requirements matrix, which shows the dollars worth of
each commodity that is required to produce a dollars worth of each industrys output, is calculated by
dividing each entry in each column of the use table by the respective column total. A national industry-byindustry direct requirements table is then estimated by multiplying the industry-share matrix by the
commodity-by-industry direct requirements matrix.
Unlike the national I-O accounts, RIMS II includes households as both suppliers of labor inputs to regional
industries and as purchasers of regional output, because it is customary in regional impact analysis to
33
This discussion is mainly for users who are familiar with I-O theory and linear algebra. For a more detailed discussion of I-O theory
and the use of regional I-O models in impact analysis, see Suggested Reading at the end of this appendix.
In RIMS II, a region consists of the county or counties that are specified by the user.
35
The make table shows the dollar value, in producers prices, of each commodity produced by each industry. The use table shows
the dollar value, in producers prices, of each commodity used by each industry and by each final user. See Benchmark InputOutput Accounts for the U.S. Economy, 1987, SURVEY OF CURRENT BUSINESS 74 (April 1994): 73115;and U.S. Department of
Commerce, Bureau of Economic Analysis, Benchmark Input-Output Accounts of the United States, 1987 (Washington, DC: U.S.
Government Printing Office, 1994).
36
See Ronald E. Miller and Peter D. Blair, Input-Output Analysis: Foundations and Extensions (Englewood Cliffs, NJ: Prentice-Hall,
1985), 149199.
34
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account for the effects of changes in household earnings and expenditures. Thus, both a household row and
a household column are added to the national direct requirements table before the table is regionalized.37
A.2 THE HOUSEHOLD ROW

Each entry in the household row shows the earnings received by households per dollar of output of the
column industry corresponding to the entry. In impact analysis with RIMS II, earnings is defined as the
earnings that are received by households from the production of regional goods and services and that are
available for spending on these goods and services. Thus, earnings is calculated as the sum of wages and
salaries, proprietors income, directors fees, and employer contributions for health insurance less personal
contributions for social insurance.38 In equation form, the household row is -
HSHRj = (W&Sj + PRPj + DFj + ECHIj - PCSIj) / TIOj ,

where the subscript j is industry j (column j in the direct requirements table), HSHR is the household row,
W&S is wages and salaries, PRP is proprietors income, DF is directors fees, ECHI is employer contributions
for health insurance, PCSI is personal contributions for social insurance, and TIO is total industry output.
The estimates of wages and salaries by I-O industry are from the national I-O accounts. The other earnings
components are not available by I-O industry and must be estimated.
The estimates of non-farm proprietors income by I-O industry are made by multiplying non-farm
proprietors income at the two-digit Standard Industrial Classification (SIC) level by each I-O industrys
share of wages and salaries in the corresponding two-digit SIC industry. The data source for non-farm
proprietors income and for wages and salaries at the two-digit SIC level is BEAs Regional Economic
Information System (REIS). The estimates of farm proprietors income for 17 I-O agricultural industries are
calculated by multiplying total farm proprietors income by the shares of total farm cash receipts
accounted for by each of the agricultural industries. The data source for farm proprietors income and cash
receipts is REIS.39
The estimates of directors fees by I-O industry are calculated by multiplying directors fees at the twodigit SIC level by each I-O industrys share of wages and salaries in the corresponding two-digit SIC
industry. The data source for directors fees is REIS.
The estimates of employer contributions for health insurance by I-O industry are prepared in two steps.
First, employer contributions to private pension funds and private welfare funds at the two-digit SIC level
are multiplied by the all-industry ratio of employer contributions for health insurance to employer
contributions to private pension funds and private welfare funds to yield estimates of employer
contributions for health insurance at the two-digit SIC level. These estimates are then multiplied by each IO industrys share of wages and salaries in the corresponding two-digit SIC industry. The source for the
all-industry data is the national income and product accounts, and the source for the two-digit SIC data is
REIS.
37
I-O theory requires that the sum of the entries in each column of the direct requirements table be less than, or equal to, one.
Because this condition is not met for all industries after the household row is added, nine industries must be combined with similar
industries.
38
Earnings include employer contributions for health insurance, because personal consumption expenditures data in the national I-O
accounts include expenditures on health care. Earnings exclude personal contributions for social insurance, because these
contributions are usually deducted from an employees wages and salaries and therefore are unavailable for spending on regional
goods and services.
39
For agriculture, the estimates of proprietors income by I-O industry are not based on wages and salaries, because the share of
total employment accounted for by wage-and-salary workers in agriculture is substantially smaller than that in other industries.
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The estimates of personal contributions for social insurance by I-O industry are calculated by multiplying
personal contributions for social insurance for all industries by each I-O industrys share of wages and
salaries for all industries. The data source for personal contributions for social insurance is REIS.
A.3 THE HOUSEHOLD COLUMN

Each entry in the household column shows the expenditures per dollar of household earnings on the product
of the row industry corresponding to the entry. The estimation of the household column is based on
personal consumption expenditures (PCE) data from the national I-O accounts. PCE data in the importedcommodity use table are subtracted from PCE data in the overall use table to yield a column that shows
PCE for domestically produced commodities. After each column entry is expressed as a share of total PCE,
the column is multiplied by the industry-share matrix (discussed earlier) to yield the PCE shares by I-O
industry.40 The PCE shares by industry are then multiplied by the ratio of personal income less taxes and
savings to personal income in order to account for the dampening effect of taxes and savings on
expenditures.
A.4 THE REGIONAL DIRECT REQUIREMENTS TABLE

The regional industry-by-industry direct requirements table is derived from the adjusted national industryby-industry direct requirements table. Location quotients (LQs) are used to regionalize the national
data.41 The LQ is used as a measure of the extent to which regional supply of an industrys output is
sufficient to meet regional demand. If the LQ for a row industry in the regional direct requirements table is
greater than, or equal to, one, it is assumed that the regions demand for the output of the row industry is
met entirely from regional production. In this instance, all row entries for the industry in the regional direct
requirements table are set equal to the corresponding entries in the adjusted national direct requirements
table.
Conversely, if the LQ is less than one, it is assumed that regional supply of the industrys output is not
sufficient to meet regional demand. In this instance, all row entries for the industry in the regional direct
requirements table are set equal to the product of the corresponding entries in the adjusted national direct
requirements table and the LQ for the industry.
The household row and the household column that were added to the national direct requirements table
are also adjusted regionally. The household row entries are adjusted downward, on the basis of
commuting data from the Census of Population, in order to account for the purchases made outside the
region by commuters working in the region. The household column entries are adjusted downward, on the
basis of tax data from the Internal Revenue Service, in order to account for the dampening effect of State
and local taxes on household expenditures.
A.5 THE REGIONAL TOTAL REQUIREMENTS TABLE AND THE MULTIPLIERS

A regional industry-by-industry total requirements table is prepared by calculating the Leontief inverse
from the regional direct requirements table.42 The regional total requirements table shows the regional
final-demand output multipliers. In I-O terminology, the multipliers account for the sum of the direct,
40
The last entry of the column is purchases of domestic services by households, which equals earnings received by domestic
service workers.
41
For most industries in RIMS II, LQs are based on 1992 wages and salaries by industry at the four-digit SIC level. The LQ for
wages and salaries is the ratio of the industrys share of regional wages and salaries to that industrys share of national wages and
salaries. For some industries, the LQs are adjusted, because wages and salaries in these industries, in comparison with proprietors
income, accounts for a relatively small share of total earnings.
42
The Leontief inverse is defined as (I-A)-1, where I is an identity matrix, A is the regional industry-by-industry direct requirements
matrix, and -1 indicates a matrix inversion.
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indirect, and induced effects of a change in final demand. The final-demand, direct-effect, and outputdriven multipliers can be derived from the total requirements table.43
A.6 FINAL-DEMAND EARNINGS AND EMPLOYMENT MULTIPLIERS

Final-demand earnings multipliers are derived by multiplying each final-demand output multiplier in the
total requirements table by the household row entry in the direct requirements table that corresponds to
the row industry for the output multiplier. This calculation is expressed as
ci,j = bi,j * a471,i ,

where ci,j is the entry in row i and column j of the final-demand earnings multiplier table, bi,j is the finaldemand output multiplier in the total requirements table, and a471,i is the household row entry in the direct
requirements table.44 Final-demand employment multipliers are derived by multiplying each entry in the
final-demand earnings multiplier table by the employment-to-earnings ratio for each row industry.45 This
calculation is expressed as
ei,j = ci,j *Gi ,

where ei,j is the entry in row i and column j of the final-demand employment multiplier table, ci,j is the finaldemand earnings multiplier, and Gi is the employment-to-earnings ratio for row industry i.
A.7 DIRECT-EFFECT EARNINGS AND EMPLOYMENT MULTIPLIERS

Direct-effect earnings multipliers are derived by dividing each household row entry in the total
requirements table by the corresponding household row entry in the direct requirements table. This
calculation is expressed as
Dj = b471,j / a471,j ,
where Dj is the direct-effect earnings multiplier for industry j, b471,j is the household row entry for industry j
in the total requirements table, and a471,j is the household row entry for industry j in the direct requirements
table. Direct-effect employment multipliers are derived by dividing the final-demand employment
multiplier for each industry by the product of the corresponding household row entry in the direct
requirements table and the employment-to-earnings ratio for each column industry. This calculation is
expressed as
Hj = Fj / (a471,j * Gj) ,
43
For the discussion of the use of these multipliers in regional impact analysis, see the section RIMS II Multipliers for Output,
Earnings, and Employment.
44
The sum of all the entries in column j of the final-demand earnings multiplier table is equal to the household-row entry in column j
of the total requirements table. The last row of the final-demand earnings multiplier table represents earnings received by
households that have domestic service jobs.
45
Employment is measured on a job-count basis for both wage-and-salary workers and proprietors. Estimates of employment by I-O
industry are made by allocating REIS employment data by two-digit SIC industry in proportion to Bureau of Labor Statistics wageand-salary employment data by I-O industry.
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where Hj is the direct-effect employment multiplier for industry j, Fj is the final-demand employment
multiplier for industry j, a471,j is the household row entry for industry j in the direct requirements table, and
Gj is the employment-to-earnings ratio for industry j.46
A.8 OUTPUT-DRIVEN MULTIPLIERS

Output-driven multipliers can be calculated from the total requirements table. The table entry for which the
row entry i equals the column entry j is called the diagonal entry for column j. The output-driven
multiplier for industry j is defined as the ratio of each entry in column j to the diagonal entry for that
column. This ratio is expressed as
oi,j = bi,j / bj,j ,
where oi,j is the output-driven multiplier i for industry j, bi,j is the final-demand output multiplier i for
industry j in the total requirements table, and bj,j is the diagonal entry for industry j in the total
requirements table.
A.9 REFERENCES
Hewings, Geoffrey J.D. Regional Input-Output Analysis. Scientific Geography Series vol. 6. Beverly
Hills, CA: Sage Publications, 1985.
Miernyck, William H. The Elements of Input-Output Analysis. New York, NY: Random House, 1965.
Miller, Ronald E., and Peter D. Blair. Input-Output Analysis: Foundations and Extensions. Englewood
Cliffs, NJ: Prentice-Hall, 1985.
Otto, Daniel M., and Thomas G. Johnson. Microcomputer-Based Input-Output Modeling. Boulder, CO:
Westview Press, 1993.
Richardson, Harry W. Input-Output and Regional Economics. New York, NY: Halsted Press, 1972.
46
The final-demand employment multiplier for industry j is the sum of all the entries except the household-row entry in column j of
the final-demand employment multiplier table.
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APPENDIX B:
STATED PREFERENCE SURVEY
B.1 INTRODUCTION
The Stated Preference Analysis was based on results from a broad range of collected stated preference
survey forms. Stated Preference Survey method uses a quota sampling approach as a fast and effective
way of gathering consumer information on the importance of different travel decisions. This includes such
issues as how travelers value travel time (for auto and transit modes) and how they value frequency of
service and access time (for transit modes). A quota survey, as opposed to a random survey or a focus
group study, is particularly effective in ensuring that all the important travel attributes are measured for
the whole population at minimum cost. The quota survey, which has been widely adopted for public opinion
surveys, is based on the development of representative quotas of the traveling public. The TEMS analysis
requires that, two sets of data be collected: (1) the data that define the travel behavior quota and (2)
the data that define the personal profile quota for the individuals surveyed. This allows the data to be
stratified by such factors as trip length, income, and group size.
B.2 SURVEY FORMS

Specifically for the Purple Line Economic Impact Study, TEMS has developed three types of Stated
Preference Survey forms - the Auto Mode Stated Preference Survey with VOT questions (see Exhibit B.1), the Transit Mode Stated Preference Survey with VOT and VOF questions (see Exhibit B.2) and the Transit
Mode Stated Preference Survey with VOA questions (see Exhibit B.3). One part of the survey contains
profile questions while the other part contains questions that aim on defining the travel behavior of the
surveyed individuals. The profile data collected from the surveys is used in conjunction with origindestination and census data to ensure that the stated preference survey can be effectively expanded to
properly represent the total population. The collected travel behavior data provides the critical part of the
data needed to estimate the generalized cost of travel.
In terms of the size of the survey for each of the quota groups identified - usually up to 10 primary
groups - it has been shown that a sample as small as 20 individuals47 is statistically significant to define the
behavioral choices of each group. These primary groups are based on correspondence between 2-3 mode
groups - auto and transit (that includes bus and rail) to 3-4 purpose groups (commuter, business, and other
(that includes shopping and social). To improve statistical reliability, TEMS typically seeks 40 to 100
respondents per quota. This means that between 500 and 1,200 surveys are needed for a stated
preference survey analysis. There were 6 total quota groups identified for the Purple Line study on the
base of selected 2 mode groups (auto and transit) and 3 purpose groups (commuter, business and other.)
The minimum of 1,000-1,200 surveys was set as a goal.
47
Spiegel, M.R., Theory and Problems of Probability and Statistics, NY McGraw Hill, pp. 112-113, 1992
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Exhibit B.1: Survey Form for Auto Users with VOT questions
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Exhibit B.2: Survey Form for Transit Users with VOT and VOF Questions
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Exhibit B.3: Survey Form for Transit Users with VOA Questions
B.3 SURVEY LOCATIONS

A very important part of the survey process is to identify the desirable survey locations. Exhibit B.4 shows
the Purple Line Stated Preference Survey locations map with the Purple Line rail corridor. Prince Georges
and Montgomery Counties were the main locations chosen for the surveys, as the proposed Purple Line
stations are located in these counties. The surveys were conducted both electronically and also in the field.
The main aim of the surveys was to target all six quota groups i.e., Business, Commuters, and for other
purpose such as shopping and other social events for both auto and transit users. The survey locations are
listed below:
Metro & Rail Stations: Greenbelt, and New Carrollton, and Bus stop at Prince Georges Community College;
Social Events: Art Fest at Riverdale, Engineers Field Day event at University of Maryland at College park,
Fenton Street Market near Silver spring Metro station, and Langley Park shopping Plaza; and
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Work Places and Educational Institutions: National Institutes of Health at Bethesda, and Rockville, Guardian
Life Insurance at Bethesda, American Institute of Physics at College Park, and Montgomery Community
College at Rockville.
TEMS collected 3,374 surveys, and exceeded their target range. As shown in Exhibit B.5 each quota group
has a statically significant representation.
Exhibit B.4: Survey Locations Map
Exhibit B.5: Stated Preference Surveys Collected by Mode and Purpose

Business
Commuter
Other
Total
Auto
60
1863
328
2251
Transit
111
538
474
1123
Total
171
2401
802
3374
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B.4 PERSONAL PROFILE DATA

Exhibit B.6 shows the trip purposes of the potential Purple Line users. Commuting to/from work is the main
purpose of travel for both auto users (84%) and transit users (52%), followed by travel to school (7% for
auto users and 31% for transit users). It is easy to see that the total share of travelers who go either to
work or to school comprise no less than 80% of auto as well as transit travelers. 5-7% of travelers indicate
their trip purpose as other, which might include vacation/recreation, tourism/sightseeing or visiting
family/friends. The share of shoppers is 2% for both auto and transit users, while the share of business
travelers is higher for transit (8%) than for auto (2%).
Exhibit B.6: Trip Purpose of Survey Respondents (by Mode)
AUTO Users:
Commuter
84%
Other
5%
Business
2%
Travel to
Shopping School
2%
7%
TRANSIT Users:
Business
8%
Commuter
52%
Travel to
School
31%
Other Shopping
7%
2%
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Employment status of survey respondents is presented in Exhibit B.7, separately for auto and transit users.
It is seen that, for auto users 90% are employed, while for transit users only 62% have jobs. However,
33% of transit users are students, while only 7% of auto users are students. Workers and students
represent over 95 percent of travelers for both modes. Also, in the poll of Transit users more respondents
indicated themselves as unemployed (3%) than in the poll of auto users (1%). In both auto and transit poll
of respondents 1% identified themselves as retired and 1% did not provide any identification of the
employment status.
Exhibit B.7: Employment Status of Survey Respondents (by Mode)
Auto Users:
Student
7%
Unemployed
1%
Uknown
1%
Retired
1%
TRANSIT Users:
Unemployed
3%
Student
33%
Retired
1%
Employed
90%
Uknown
1%
Employed
62%
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PURPLE LINE
Exhibit B.8 illustrate employment distribution along the Purple Line corridor in comparison with statistical
and survey data. It is seen in the Exhibit that Montgomery and Prince Georges Counties have highest
share of employed individuals and lowest share of retired and unemployed individuals based on statistical
data from U.S. Census 2006-2008 American Community Survey data on 3-year estimates on Employment
status48. The survey data is very similar to the statistical data showing the representativeness of the stated
preference survey.
Exhibit B.8: Employment Distribution Statistical Data and Survey Data
90%
80%
Survey Results
70%
Percent
60%
Statistical Data
50%
40%
30%
20%
10%
0%
Employed
Student Only
Retired
Unemployed
Employment Status
Exhibit B.9 and B.10 illustrate household income groups (in Montgomery and Prince Georges Counties
respectively) distributed in accordance with statistical from U.S. Census 2006-2008 American Community
Survey data on 3-year estimates on household income and survey data. It is easy to see in Exhibit B.9 that
in Prince Georges County the share of households in each of four groups calculated based on statistical
and survey data is almost the same (the difference is 5% or less). In Montgomery County the shares of two
medium income groups, based on statistical and survey data are almost identical. Also in Montgomery
County, there was a higher share of survey respondents from high-income households and lower share of
those who belong to low-income households in comparison with the average statistical data. This is
because some of the proposed Purple Line stations such as Bethesda or Connecticut Avenue, are located
in the center of the luxury communities in Montgomery County. Thus, in 2008 median household income was
$130,637 in Bethesda and $211,349 in Chevy Chase (Connecticut Avenue station). For comparison, in
2008 median household income for Montgomery County was $94,319.
48
American FactFinder database, http://factfinder.census.gov and MapPoint demographic database.
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PURPLE LINE
Exhibit B.9: Household Income Distribution in Prince Georges County Statistical and Survey Data
40%
Survey Results
35%
% of Households
30%
Statistical Data
25%
20%
15%
10%
5%
0%
Less than $55,000
$55,000 - $74,999
$75,000 - $99,999
$100,000 or more
Exhibit B.10: Household Income Distribution in Montgomery County Statistical and Survey Data
Range of Household Income
60%
Survey Results
% of Households
50%
40%
Statistical Data
30%
20%
10%
0%
Less than $55,000
$55,000 - $74,999
$75,000 - $99,999
$100,000 or more
Range of Household Income
A comparison of the results of the stated preference survey such as employment and household income
data with that of the U.S. Census statistical data shows that the employment and income distributions by
mode are representative of statistical data. This means that the database will be representative of the
Purple Line corridor value of time, values of frequency and values of access.
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PURPLE LINE
B.5 BEHAVIORAL ATTRIBUTES

Behavioral attributes reflect the behavior of the respondent when travel conditions change. For the
purpose of this study using stated preference surveys we collected information necessary to identify the
Value of Time (VOT) for all travelers, the Value of Frequency (VOF) and the Value of Access (VOA).
Each of these three variables (VOT, VOF and VOA) has been analyzed using the trade-off method. This
method aims at deriving VOT (VOF or VOA) by examining the pattern of trades a respondent makes
among the various situations described in a travel behavior part of a questionnaire form. In this way a
VOT (VOF or VOA) estimate can be assigned to each respondent. Exhibit B.11 through B.13 provides the
example of the respondents trading behavior and illustrates how VOT is calculated using trade-off
method. The VOT is calculated for the neutral point located in the intersection between the line indicating
no preference and the line connecting the points indicated by the respondent. As seen in Exhibit B.11 the
neutral point or no preference line is located at the fourth row indicating that the respondent is willing to
spend $12 more for 45 minutes less. This implies the respondent is willing to spend $16 more for 1 hour of
time saving. Thus, the respondent has a VOT value of 16 dollars per hour.
Not all survey respondents illustrated perfect trading behavior (similar to those shown in Exhibit B.11 or
B.12). About 6% of the respondents were identified as non-traders. VOT calculated based on the
example shown in Exhibit B.13 is assumed to be $45 for 3 hours (15 dollar per hour) or less as there is no
trading, and the individual is showing a preference to spend time rather than money.
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PURPLE LINE
Exhibit B.11: VOT calculation based on Trade-Off Method: Trading Behavior- Example # 1
Exhibit B.12: VOT calculation based on Trade-Off Method: Trading Behavior - Example # 2
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PURPLE LINE
Exhibit B.13: VOT calculation based on Trade-Off Method: Non Trading Behavior
VOT, VOF and VOA calculated on the base of Stated Preference Survey were carefully checked for
statistical significance. In accordance with the general statistical theory, results are considered statistically
significant if they are normally distributed and 68% of the results fall in the range: (m-; m+), where m
is mean and is standard deviation49. All travel demand variables calculated using data from the Purple
Line Stated Preference Survey, were found statistically significant. Exhibit B.14 illustrates the VOT
distribution for auto commuter travelers. It is easy to see that 80% of the results fall in the required range.
Exhibit B.15 provides the information about the number of survey forms used in calculation of VOT, VOF
and VOA by each mode and purpose. Since one transit survey form could be used for both transit VOF
and VOT analysis, the total number of forms used for calculation as shown in Exhibit B.14 are higher than
the total number of forms received as shown in Exhibit B.5.
The Purple Line Stated Preference Survey results of VOT, VOF and VOA calculated for two modes (auto
and transit) and three types of purpose (commuter, business and other) are presented in Exhibit B.16 and
b4.17. Based on the calculations, the following observations were made:
49
The VOT, VOF and VOA values are larger for auto than for transit;
Business trips have larger VOT, VOF and VOA values than commuter and other trips;
The VOT, VOF and VOA values are consistent with those of previous studies (e.g., Bay Bridge
Travel Survey, 2006) after adjusting to 2010 dollars for similar trip length.
T.T. Soong, Fundamentals of Probability and Statistics for Engineers, John Wiley & Sons Inc., 2004, p204.
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PURPLE LINE
Exhibit B.14: VOT Distribution: Auto Users (Commuter)
Mean VOT=12.12
12%
12%of
ofresults
resultsare
are
outside
outside
negative
negativeSD
80% of results are

in the
In
onerange:
SD
(m - , m+ )
one-
SD
m
8% of
8%
of results
resultsare
are
outside
outside positive
positive
SD
m +
Exhibit B.15: Stated Preference Surveys Used to identify VOT, VOF and VOA (by Mode and Purpose)
Business
Commuter
Other
Total
Auto
60
1863
328
2251
Transit
192
900
801
1893
Total
252
2763
1129
4144
Exhibit B.16: Purple Line Stated Preference Survey Results on Value of Time - VOT
(Auto and Transit)
Value of Time - VOT
Business
Commuter
Other
Auto
$16.83
$12.12
$11.60
Transit
$11.31
$8.91
$7.74
Exhibit B.17: Purple Line Stated Preference Survey Results for Transit for Value of Frequency VOF and Value of Access -VOA (Transit)
Transit
Business
Commuter
Other
Value of Frequency - VOF
$8.45
$7.17
$6.17
Value of Access - VOA
$21.62
$17.46
$15.36
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PURPLE LINE
The comparison between Auto VOT values from the 2010 Purple Line and TEMS 2006 Bay Bridge Stated
Preference Surveys are shown in Exhibit B.18. The Bay Bridge Auto VOT is inflated from 2006 dollars to
2010 dollars using corresponding CPI index and factored by trip length (i.e., in the Bay Bridge survey the
average trip length was 25% longer than that of the Purple Line survey). As seen in Exhibit B.18, factored
Bay Bridge Auto VOT values are close to Auto VOT values obtained from the Purple Line survey.
Exhibit B.18: Comparison between Auto VOT from 2010 Purple Line and 2006 Bay Bridge
Stated Preference Surveys
Auto Value of Time (VOT)
Business
Commuter
Other
Bay Bridge Survey, $2006
$19.17
$15.98
$12.46
$20.75
$17.29
$13.48

(factored by Trip Length)
$15.56
$12.97
$10.11
Purple Line Survey, $2010
$16.83
$12.12
$11.60
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PURPLE LINE
REFERENCES
1. McCarthy, P.S. Transportation Economics Theory and Practice: A Case Study Approach. Oxford:
Blackwell Publishers Ltd., 2001.
2. Beesley, M. Urban Transport: Studies in Economic Policy. London: Butterworth, 1973.
3. Mishan, E.J. Cost-benefit Analysis: An Informal Introduction. 4th ed. London: Rutledge, 1994.
4. Mishan, E.J. Rent as a Measure of Welfare Change. American Economic Review. 49, June 1958,
pp.386-394.
5. Beckmann, M.J. On the Distribution of Urban Rent and Residential Density. Journal of Economic
Theory. Vol. 1, N1, 1969.
6. Solow, R.M. Congestion, Density and the Use of Land in Transportation. Swedish Journal of
Economics. Vol. 74, N1, 1972.
7. Lancaster, K.J. A New Approach to Consumer Theory. Journal of Political Economy, 74.2, April
1966, pp. 132-157.
8. Christaller, W. Central Places in Southern Germany. (Translated by Baskin, C. W.) Englewood Cliffs:
Prentice Hall, 1966.
9. Loesh, A. The Economics of Location. New Haven: Yale University Press, 1954.
10. Samuelson, P. & Nordhaus, W. Economics. 14th Edition. New York: McGraw-Hill. 1992.
11. Quarmby, D. Travel Mode for the Journey to Work, Journal of Transportation Economics and
Policy, September 1967
12. Mishan, E. Cost-Benefit Analysis, New York, NY: Praeger Publishers, 1976.
13. Metcalf, A.E. Economic Rent: A New Dimension in the Economic Evaluation Process, Transportation
Research Board, 71st Annual Meeting, January 12-16, Washington, DC, 1992.
14. Arab Human Development Report. New York: United Nations Development Program, 2002.
15. Manski, C. and McFadden, D. Structural Analysis of Discrete Data with Econometric Applications.
London: MIT Press, 1981.
16. Glaister, S. Fundamentals of Transport Economics. New York: St. Martins Press, 1981.
17. Torrens, P.M. How Land-Use Transportation Models Work, CASA Working Paper Series, 2000,
Paper 20, http://www.casa.ucl.ac.uk/.
18. Wilson, A.G. Land-use/Transport Interaction Models, Journal of Transport Economics & Policy,
1997, Volume 32, pp. 326.
19. Kachigan, S.K. Multivariate Statistical Analysis: A Conceptual Introduction. Second Edition. New
York: Radius Press, 1991, pp. 176-179.
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20. Metcalf, A. Transport and Regional Development in Ireland. Transport and regional development
(Ed. By Blonk, W.A.G.) Westmead, England: Saxon House, 1978, pp. 190-208
21. Metcalf, A., Markham, J., Fenney, B. A Price Resistance Model for Personal Travel. Regional
Studies, Journal of the Regional Studies Association. 10, 1976. pp. 79-88.
22. Ohio Hub Passenger Rail Economic Impact Study Prepared for Ohio Rail Development
Commission, Ohio DOT. TEMS, Inc. May, 2007. Chapter 7, p. 51.
23. Metcalf, A. Economic Rent: The Supply-Sides Answer to Consumer Surplus, 2013
March 2015
81

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PRELIMINARY ECONOMIC IMPACT STUDY: UPDATE

Transportation Economics &

INTRODUCTION (STUDY PURPOSE AND CORRIDOR) .................................................................................. 1

APPENDIX A: DATA SOURCES AND METHODS FOR RIMS II ................................................................................ 61

Transportation Economics & Management Systems, Inc.

1 INTRODUCTION (STUDY PURPOSE AND CORRIDOR)

See: http://purplelinemd.com/about-the-project for details.

Transportation Economics & Management Systems, Inc.

Transportation Economics & Management Systems, Inc.

2 ECONOMIC ANALYSIS FRAMEWORK

2.1 THE CHARACTER OF THE OVERALL ECONOMY

Markets for Goods

goods and services

Markets for Factors of

goods and services

Transportation Economics & Management Systems, Inc.

Reduced Transportation Costs

Increased Economic Rent

Transportation Economics & Management Systems, Inc.

2.2 ECONOMIC RENT METHODOLOGY

Transportation Economics & Management Systems, Inc.

Transportation Economics & Management Systems, Inc.

Travel time between zones i and j for purpose p5;

Value of Time for purpose p

See: [7] and [8].

Transportation Economics & Management Systems, Inc.

Low Economic Rent

Little Economic Rent

Increasingly Poor Accessibility

Transportation Economics & Management Systems, Inc.

3 THE ECONOMIC EVALUATION DATABASES

3.2 ECONOMIC BENEFITS STUDY PROCESS

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3.3 TRANSPORTATION NETWORKS: GENERAL OVERVIEW

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3.4 AUTO NETWORK

Linden to Downtown Washington DC

I-495 South of Downtown Washington DC to I-195

Frederick, VA to I-695 Beltway

George Washington Parkway

Downtown Washington DC to I-70

Downtown Washington DC to I-495 Beltway

Downtown Washington DC to Annapolis, MD

Downtown Baltimore, MD to Hunt Valley, MD

I-495 to Downtown Baltimore, MD

Frederick, MD to I-695 Beltway

Transportation Economics & Management Systems, Inc.

I-695 to Downtown Baltimore, MD

Transportation Economics & Management Systems, Inc.

3.5 TRANSIT NETWORK

Exhibit 3.5: Study Region Network

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Exhibit 3.6 Major Transit Links Coded within Network

Red, Green, Blue, Yellow, Orange Line

Penn Line, Camden Line, Brunswick Line

Washington Metro Bus

Fredericksburg Line, Manassas Line

Baltimore Metro, Baltimore Light Rail

Exhibit 3.7: Travel Attributes of the Purple Line Preferred Alternative

Bethesda - Connecticut Avenue

Connecticut Avenue - Lyttonsville

Woodside - Silver Spring Transit Center

Silver Spring Transit Center Silver Spring Library

Silver Spring Library Dale Drive