» Coupling real estate investment with the construction of new transit lines is the future, but the conditions need to be right.
Public development and ownership of the transportation system in the United States provided some broad, important social benefits that would not have been possible had our governments left it in the hands of the private sector. The downfall of the public transit and rail industries between the 1930s and 1970s throughout the country (itself partly a consequence of government investment in roads) was due to the fact that those services were no longer profitable. Government intervention through takeover of bankrupt lines kept those services operating and ensured the continuing existence of what is truly an essential public service in our major metropolitan areas.
Yet with the governments takeover of transit services, our regions lost a powerful skill that private transportation providers a century ago used well: Connecting new development with transit investments. The history of New York City’s Grand Central Terminal is often told, but it bears repeating. The New York Central Railroad, which built the terminal, decided to submerge the tracks under Park Avenue north of the terminal in order to create a massive new business district surrounding the station. That neighborhood remains the nation’s most important commercial center.
The railroad understood that the land it used to build its line was valuable, and that allowing new investments in the area near its station would produce a virtuous cycle that built ridership, which, in turn, increased the value of the surrounding land. It’s an understanding we must absorb if we are to ensure that our transit investments are most effective.
After decades of simply ignoring the land use-related effects of transit investments, over the past two decades local governments have made halting efforts to take advantage of this fact, encouraging transit-oriented development by private investors in areas near new stations through the sale or lease of land or the altering of land use regulations to better accommodate denser growth. The most dramatic version of this is the Hudson Yards program on Manhattan’s West Side, where millions of square feet of new office and residential buildings are under construction or planned. Parts of this land was sold to a private bidder by the Metropolitan Transportation Authority (MTA), which will run a new subway station on the 7 Line, and parts were rezoned to allow big buildings by the city.
Altogether, this represents an intentional effort by New York City to repeat the lessons of Grand Central Terminal by merging transportation investment with a real estate program. But, unlike previous private sector development programs, the MTA and city have not been directly involved in the surrounding projects themselves, relying instead on third-party developers to make the choices and, eventually, reap the rewards.
All Aboard Florida’s $1.5 billion investment in new intercity rail services between Miami and Orlando suggests that the private sector is, in part, picking up the slack by taking advantage of the same forces that the private sector used to build its rail lines a century ago. The rail line will run 235 miles from downtown Miami to Orlando airport in around three hours (compared to five hours on Amtrak today). All Aboard Florida is investing in massive new station complexes in Miami, Fort Lauderdale, and West Palm Beach. The Miami terminal, which will be located on company-owned land downtown, will include two million square feet of office or commercial space, and one million square feet of residential space, as shown below. The project is coming along more slowly than initially planned, but company officials insist they will not need government aid other than a large, low-interest loan from the federal government which it expects to pay back from ticket revenues.
Why has it taken so many decades for the private sector to get back into the development game? The growing demand by individuals to live in urban centers is attracting interest in monetizing the benefits of transit-oriented development, and that’s particularly true for large urban markets like Miami. All Aboard Florida will not need its real estate investments to subsidize its rail operations, which it expects to be operationally profitable, but those developments will certainly help justify the investment in the rail service. They’ll also build the rail line’s ridership, as they’ll create major destinations right at the stations.
Government transit agencies focus on the provision of good transit service, and if you ask management at most agencies, they’ll let you know that they need to focus on “what they’re good at,” i.e., running buses and trains. Yet that approach has repeatedly produced projects with mediocre ridership and little nearby development. Transit agencies are reliant on surrounding land uses to support their operations and whether or not they want to, they must make real estate development something they’re “good at.” It is in the public interest to make our transit system not only well-used, but also the foundation for a sound urban development strategy.
The idea of melding new transportation infrastructure with real estate investments does not have to be a strategy reserved to the private sector. For decades, Hong Kong has used its metro system (76% owned publicly) to invest in surrounding developments, which include properties as diverse as towers and shopping malls (this is known as the “rail plus property” model). Similarly, the Grand Paris Express program I profiled earlier this week will integrate its stations into large new developments directly planned by the government implementing agency (“Completed by private developers, the connected project takes into account the technical and functional prescriptions defined by” the agency, with a program “defined by municipal land use plans“). A special tax on property near stations on the line will help pay for the construction of the metro project.
Of course, the All Aboard Florida, Hong Kong metro, and Grand Paris Express projects are exceptional programs that cannot be repeated in most regions. All rely on strong local real estate markets where there is significant demand for major new development. All Aboard Florida takes advantage of that company’s prior ownership of the tracks used for the trains and of the land where its stations and surrounding real estate will be completed. Meanwhile, the transit investment programs in Hong Kong and Paris have been supported by major infusions of government grants that are not available in most American cities and by considerable political will to invest in the creation of denser, more transit-oriented regions.
Most U.S. regions are too sprawling, too auto-dominated, or too poor to expect this kind of transit-oriented development to occur simultaneously with new rail or bus links, particularly if that means that the transit agency has to take on some risk that a project will fail financially.
Nonetheless, major U.S. cities with significant demand for dense living and working environments like Boston, Chicago, Los Angeles, New York, Seattle, and Washington should evaluate their transit investment programs to ensure that they’re taking the greatest advantage of surrounding land to develop large real estate projects. These developments will not only increase system ridership but also bring decades of future revenue from office, residential, and retail rent, all of which can be used to improve transit system finances. Recent system expansions in Los Angeles, Seattle, and Washington — none of which have included major development projects on land owned by the transit agencies – suggest that there is significant work left to be done.
Images above: Proposed Miami station, from All Aboard Florida.
» We have failed to come to terms with the fact that the transit we’re building is too slow.
Residents of the Twin Cities greeted the opening of the new Green Line light rail link last month with joy and excitement, finally able to take advantage of a train connection between downtown Minneapolis and St. Paul. The 11-mile rail line runs through a relatively densely populated area, serves two business districts, and travels through the heart of a university.
It’s also alarmingly slow. Green Line trains are taking up to an hour to complete their journeys, and even optimistic schedules released by the local transit agency put running times at 48 minutes, or less than 14 mph on average.
Of course, the Twin Cities are hardly alone in their predicament. Recent transit lines elsewhere in the country feature similarly leisurely travel times. The new Houston North Line, for example, is averaging 17 mph.
Continue reading The value of fast transit »
» Foxx reiterates the Obama Administration’s demand for more transportation funding, but fails to commit to a new funding source outside of business tax reform. He also is non-committal on reforms to the Federal Railroad Administration’s rules for commuter rail systems.
Yesterday, I had the opportunity to chat with Anthony Foxx, who became the U.S. Secretary of Transportation last year and was previously mayor of Charlotte. I wrote an article on the interview’s major focus points on the website of my employer, Chicago’s Metropolitan Planning Council. The transcript of the full interview is posted at the bottom of this post.
In addition to the conclusions I noted on MPC’s site (and please read those; they are relevant to the discussion here), I want to note a few points about the interview that reflect my personal sense of the administration’s progress on moving forward with a new transportation bill.
It was evident in Secretary Foxx’s responses that he remains committed to the Obama Administration’s push to increase funding for transportation. Of course, the Obama Administration has been promoting increased funding for transportation since 2009, beginning with the stimulus (which roughly doubled federal expenditures for transportation for a short period), and continuing with a number of proposals over the years, each of which promoted the idea of a huge infusion of funds for transportation but which ultimately produced little change. From that perspective, Secretary Foxx’s determination to pass a new four-year, $302 billion program for infrastructure (a plan that would increase expenditures by roughly 50%) seems rather unlikely to result in much of anything.
This is particularly true in light of Senator Barbara Boxer’s proposal to simply extend the funding levels provided for in MAP-21, which themselves were little changed from the previous level of spending. At the heart of the problem, as we all know, is that the transportation user fee model (premised on fuel tax revenues) has collapsed and no one is willing to do much of anything about it. It’s not Secretary Foxx’s fault, but the Obama Administration’s decision to propose funding transportation by using “business tax reform,” which is essentially premised on one-time repatriation of foreign assets, is a half-empty call for change, neither likely to pass Congress nor a long-term solution. I’m skeptical. It’s not that the Administration has done anything terribly wrong, but there certainly has not been much courage coming out of the White House on this issue.
No one with particularly significant power is willing to simply say, “I will increase the gas tax,” or “I will institute a vehicle-miles traveled fee.” It’s not an easy demand, certainly, but it is a necessary one if we want to move forward with more funding for our road and transit systems.
In this context, it is frustrating to watch Secretary Foxx, like Secretary Ray LaHood before him, extol the values of high-speed rail (I confess I hold them dear as well), without making any progress in actually paying for it. Foxx pointed to Florida and Texas as models of interest in high-speed rail even in relatively conservative states – a fair point — but he failed to note that those states are hoping that the private sector will chip in for most or all of the cost of those lines. Certainly conservatives will support transportation investments that are fully paid for by someone else, but what happens when the Florida or Texas projects require public subsidy? Will they face the same resistance as has California’s heavily contested project has?
On the other hand, what other options does the Administration have in the face of a recalcitrant House of Representatives?
Nevertheless, Secretary Foxx’s answers about the Department of Transportation’s willingness to expand the possibility of local funding options were positive. States and cities should be able to toll their local highways if they so desire, but right now they’re stymied by federal regulations that make tolling impossible on most Interstate highways. His willingness to consider Transportation for America’s new policy proposal that would encourage local and state competition in awarding transportation funding is potentially exciting.
In addition, where the executive branch of the federal government may have an easier time producing positive results is in the implementation of regulatory changes within agencies of the Department of Transportation. One issue that has been of particular concern to those interested in improving American rail service has been the Federal Railroad Administration’s (FRA) rules about train weight and strength, which effectively make lighter, more efficient European and Asian trains impossible in the U.S. Stephen Smith noted last year in Next City that the FRA was considering changes to these rules by 2015, when positive train control (PTC) is supposed to be implemented.
Secretary Foxx, however, was far less direct on the issue than this change would imply, noting that “Whether that issue or how that issue comes up in the context of that is still an open question, but we’ll take a look at any issues put out there.” It’s hard to know based on that whether the Department of Transportation or the Obama Administration in general will take these issues seriously in the coming months, but the issue is important, and we can only hope they’ll notice.
Full interview transcript follows below Continue reading An Interview with Secretary Foxx
» Despite the sound intentions from the mayor, opposition may kill Nashville’s BRT project.
One of the primary arguments made for investing in bus rapid transit (BRT) is that such systems can be implemented not only more cheaply, but also with more ease, than rail lines.
A look at the situation in Nashville suggests that there are limitations to that “ease.”
Much like in cities across the country, residents of Nashville have strenuously debated the merits of investing in a 7.1-mile, $174 million BRT line called the Amp. The project would link the city’s east and west sides, running from the Five Points in East Nashville through downtown to St. Thomas Hospital, past the city’s West End. With dedicated lanes along 80% of its route, frequent service, pre-paid boarding, level platforms, transit signal priority, and an improved streetscape to boot, the line could potentially serve about 5,000 rides a day, double the
Continue reading Is Effective Transit Possible in a Transit-Hostile City? »
» Evidence suggests expanded rail operations produce higher ridership gains than more bus service.
In researching the article I wrote last week for the Atlantic Cities on bus rapid transit (BRT), I wanted to provide a basic piece of evidence that offered support for the idea that typical bus operations were not offering the sort of service that attracted riders effectively. My sense (hardly a unique perspective, of course) was that bus services in cities around the country are often simply too slow and too unreliable for many people to choose them over automobile alternatives. Rail, particularly in the form of frequent and relatively fast light and heavy rail, may be more effective in attracting riders, but so might, the article hypothesizes, BRT services, which provide many of the service improvements offered by rail.
To provide such evidence, I compared ridership growth between 2001 and 2012 on urban bus and rail services on the ten
Continue reading Recent Trends in Bus and Rail Ridership »