The primary obstacle to attracting equity investment in new transit projects is the fact that most transit projects are "revenue negative," with farebox revenues funding only a percentage of operating costs and making no contribution to the capital cost of design and construction. New fixed guideway transit systems are capital intensive and expensive. In addition, fares paid by transit users generally are kept as low as possible because the systems serve, among others, the needs of lower-income citizens and provide the only affordable form of mobility for many urban residents.
Additionally, if a transit project is built as an extension of an existing system, private operation of a single segment of a publicly owned system may not be feasible. Private investors might be wary of assuming the ridership risk of any portion of a system operated by an entity they do not control. And DBOM contractors who operate the transit systems that they construct want to be insulated from farebox risk since they don't have control over fares or certain other factors affecting ridership.