While I couldn't quite explain myself on the radio show, lacking time, I realized today that I have a blog and can spend more time grouching about it.
The plan for the Sacramento/West Sacramento streetcar line isn't too dissimilar, in some ways, to the historic use of streetcars as a stimulus for development. In the late 19th and early 20th century, development companies would either pay a streetcar line (or start their own streetcar line) to run to their not-yet-constructed subdivisions, and encourage home buyers to come on out and buy a plot of land. This was done in all directions from downtown Sacramento: north to North Sacramento, south to Colonial Heights and Colonial Acres, and across the river to West Sacramento. (I actually just wrote an article for the Midtown Monthly on the history of the West Sacramento streetcar.) Operating deficits are paid by the land development company. This was done because the potential buyer and subdivision builders felt more confident about the future of the area: the spot may have been way out of walking distance from work, but they could just take the streetcar.
The problem arose when the neighborhood got built out, more often than not with single-family homes on large lots. A suburban-style development doesn't generate enough trips to fulfill operating revenue, especially considering the restrictions streetcar lines operated under (they were responsible for street maintenance near their right-of-way, and raising fares was almost impossible.) So, rather than operate the streetcar line at a loss, the line would be closed down. Lines to North Sacramento and Swanston, Rio Linda and Elverta, and West Sacramento only ran for a decade or so before their subsidies ended and the trains stopped. The tracks for these systems didn't go out of service, because interurban trains ran on them too (the M Street Bridge and Tower Bridge were the mainline for the Sacramento Northern trains from Oakland to Chico) but local service simply couldn't pay for itself.
This wasn't initially a problem in the central city--the PG&E cars operated mostly in downtown and midtown, which had much denser populations. There were also other things to see on the PG&E streetcar, like downtown shops, offices and workplaces, and recreational destinations like East Park, Joyland the Riverside Baths, and especially the State Fairgrounds.
Eventually, though, the PG&E lines ran into trouble. The problem with a streetcar system is that it has to expand like spokes from a central hub, and the farther you get from the hub, the farther apart the spokes are. Most streetcar systems didn't make enough money to provide connecting routes between these spokes, which meant that areas in between the "spokes" didn't get streetcar service, and were therefore cheaper. In the 1920s, automobiles were starting to become accessible, and a potential homeowner had a choice between a more expensive home near the streetcar line or a cheaper one with a car--and more and more started choosing the latter.
This move towards suburbanization, and depopulation of downtown, had started as early as the early 19th century, but streetcars made them more possible and automobiles accelerated the process. Eventually, even in central city neighborhoods there wasn't enough traffic left to pay operating expenses. While many blame National City Lines for the demise of many streetcar systems, including Sacramento's, they were more of the straw that broke the camel's back: when NCL took over operations in 1943, PG&E was only operating four of its original streetcar lines--one of which was only brought back into service (#3) due to wartime gas shortages. The rest had already been replaced by buses, and the SN and CCT streetcar lines were being run at a loss as a condition of their continued freight trackage rights through the central city.
What does this mean today? Building a streetcar from already dense and trip-attracting midtown/downtown Sacramento, and relatively dispersed West Sacramento, means that West Sac had better not repeat its mistake of a century ago, and build at a higher density. If they can go dense enough (and affordable enough that moderate-income folks can afford it, not just executives, empty-nesters and DINKs) they will get enough traffic to justify it and then some. It also means that it wouldn't hurt to have more of the sort of dense development we're starting to see in downtown Sacramento--as long as it is mixed-income as well. It's kind of silly to have high-level execs who can take the streetcar to work but people who work at a coffee shop have to drive in from Orangevale.