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How has Madrid been able to achieve so much? Perhaps most crucially, its transit upgrades have enjoyed muscular political support. In 1995, Alberto Ruiz-Gallardón was elected president of Madrid’s Autonomous Community, an entity similar to an American state, on a promise of building 17 miles of new metro track within four years. He made good on his word. In 1999, Gallardón, having delivered on his pledge and having exceeded it, won reelection on a platform to build even more ambitious metro expansions.
To raise the large amounts of money required and avoid European Union rules limiting government debt, policymakers devised a combination of public authorities and public-private partnerships. In the partnerships (used, for example, to build the light-rail lines), construction companies spent their own money to fund the work and received concessions to operate the new lines, earning revenues from ticket sales and subsidies from Madrid’s transit authority. But the subsidies are based on formulas that don’t shield the companies from risk if rider demand proves less than forecast.
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