Congress Elections Finance President

After Two Years of Democratic Control in Washington, A Transportation Roundup

» Advances on livability and intercity rail were overshadowed by the inability of the Congress to legislate multi-year transportation funding. Republican control of the House beginning in January changes the equation significantly.

The 2008 elections brought the full reigns of the executive and legislative branches of the U.S. government under the control of the Democratic Party, power that enabled the passage of the stimulus, health care reform, and, this month, a huge package of tax cuts. Though transportation policy was clearly not the priority of either the Obama Administration or the Congress, the decision by voters last month to install a Republican Party-controlled House of Representatives is likely to alter the government’s approach on the issues quite significantly. Thus it is worth looking back to examine the record of federal government over the last two years.

The Obama Administration and the Democratic Congress have changed some aspects of federal policy significantly, advancing grant programs that reward cities for developing alternative transit systems and seriously promoting the national intercity rail project. A full-scale change in Washington’s approach to transportation, however, has yet to be accomplished.

The most significant lost cause has been, of course, the inability of the Congress to move forward on a multi-year transportation reauthorization bill. Though then-Chair of the House Committee on Transportation and Infrastructure James Oberstar (D-MN) proposed a draft of such legislation in June 2009, his effort went mostly unnoticed on Capitol Hill. It was never brought to the attention of the full House of Representatives and the relevant Senate committees never bothered to consider it.

The biggest problem: Party control over Washington or not, the Democrats could not come to any sort of agreement about how to fund transportation, an increasing problem because gas tax revenues are falling relative to both inflation and the public need. President Obama refused to consider raising fuel fees in the midst of the recession and directed his press secretary to shoot down a promising alternative, the vehicle miles traveled fee. This meant repeated temporary extensions of the expired transportation legislation, SAFETEA-LU, paid for through general fund expenditures rather than the fuel tax. These problems have yet to be resolved, and are unlikely to change over the course of the next two years.

Mr. Oberstar’s proposal would have transformed thinking about national transportation spending: It proposed shifting spending to two reserves, one dedicated to maintaining the existing system and then other to ramping up new capacity. Significantly, it would have required some allocations to be distributed in a mode-neutral manner, meaning that in some corridors, a public transit project might be picked by a local agency as the best use of funds instead of a highway expansion. This would have represented a major advance over current affairs, since currently roads and transit funding are divvied up into separate pots. But the effort went nowhere.

Thus in terms of allocations towards highway programs, transit maintenance, and new rail projects, the Department of Transportation has changed little. Several major new transit capital projects have been approved to receive major New Start grants from Washington, including two light rail lines in Houston, two more in Denver, and the San Francisco Central Subway, among others. And funding on the nation’s biggest transportation projects under construction, including New York’s Second Avenue Subway and East Side Access, Dallas’ Green Line, and Seattle’s University Link, continued apace. (The decision by New Jersey Governor Chris Christie to cancel the ARC Tunnel was depressing for the public interest, but it reflected no failure on the part of Washington.)

Yet these projects would have probably been funded whether Democrats have swept into power or not. Other measures have been far more indicative of the changes that have taken place over the past two years.

The failure of the Democrats to move a transportation bill forward was partially resolved by the passage of the stimulus in early February 2009. That $800 billion bill provided a huge shot in the arm to transportation projects all over the country, giving $46.2 billion to highway, transit, and rail. Though highway expenditures continued to receive the majority of funds, their share of total spending was lower than in a typical year’s federal transportation allocations. Without these essential funds, thousands of transportation projects, underfunded by local and state agencies, would have come to a halt.

But the big news was the $8 billion the bill included for intercity rail, an allocation added personally by President Obama and far more than members of Congress had suggested in the course of their own negotiations. This infusion of funds, in addition to the $2.5 billion directed for such projects in fiscal year 2010, represented the largest-ever American public commitment to rail. Whether the program is ultimately refunded remains up in the air, especially because of the radical anti-rail stance of some Republican governors in states such as Ohio and Wisconsin. Nonetheless, this funding is enough to ensure the construction of the first segment of California’s high-speed line and finance major improvements to Amtrak corridors in Iowa, Michigan, North Carolina, and Washington. Florida’s fast train between Tampa and Orlando — to be the first such project in the country — is now fully financed and will be built, as long as new Governor Rick Scott (R) agrees to the program.

The stimulus put a (temporary) end to a highly egregious anti-transit rule that provided higher tax rebates to drivers than public transportation riders.

Finally, the stimulus provided to the Department of Transportation $1.5 billion in funding to distribute to projects at the discretion of the Secretary. These TIGER grants were offered to mobility programs that were not being funded under traditional means. When grantees were announced in February 2010, hundreds of millions of dollars were provided to freight rail improvement programs and upgrades to transportation terminals. In addition, streetcar projects in Dallas, Detroit, and Tucson received big endorsements, starting off a national streetcar boom.

The department used congressionally allocated funds to finance another $600 million in TIGER II grants unveiled in October 2010. These sponsored streetcar lines for Atlanta and Salt Lake City and several freight projects, among others. In addition, it provided funding for the demolition of a freeway in New Haven for the purposes of transforming it into an urban boulevard, arguably a first for U.S. transportation funding.

The Urban Circulator grants announced in December 2009 and awarded in July 2010 provided another $293 million in funds for bus improvements and streetcar construction. Though Fort Worth has apparently abandoned its planned streetcar, even after receiving a $25 million commitment from Washington, Cincinnati, Charlotte, and St. Louis — each of which also benefited from major allocations — are moving ahead. Several other cities, including Chicago, New York, and Stamford, got funding for downtown busways. Boston received $3 million for the nation’s first federally funded bike sharing program. Together, the Urban Circulator, TIGER, and TIGER II grant programs represent the government’s largest-ever contribution to small-scale transit projects, and the nation’s first major public commitment to the construction of streetcar lines.

Correspondingly, for the first time, the Department of Transportation has taken the idea of “livability” seriously and directed allocations accordingly. In March 2009, the DOT announced the Joint Sustainable Communities Initiative with the Department of Housing and Urban Development with the goal of coordinating federal transportation and housing expenditures. This was a major demonstration of the government’s commitment to the effort to plan mobility and development in sync, an idea that has been accepted by urban planners for years but largely off the radar of government officials.

In addition, in January 2010, the agency announced that it would be changing the way it judged transit New Start capital grants to move beyond the assumption that cost-effectiveness based on “travel time savings” is the most important indicator of a good transportation project. This policy move opened up the possibility of funding “slow” transit, arguably the best sort for the creation of walkable neighborhoods.

In Fall 2010, the Obama Administration began pushing for a new transportation bill. The President announced that he wanted a $50 billion “downpayment” on transportation infrastructure with the ultimate goal of constructing 4,000 miles of railways and 150 miles of runways, on top of renovating 150,000 miles of roads. This package — a sort of second stimulus — would be the first step in a multi-year transportation bill. But the Congress’ focus instead on tax cuts won the day, and this transportation focus seemingly disappeared.

Two years of Democratic Party power in Washington, then, meant quite a few improvements to the nation’s transportation policy-making, bringing to the fore projects that have been largely ignored by the government for decades. The Obama Administration and its allies in Congress have made clear their collective interest in funding projects that are founded on the idea that transportation can be an important element in the creation of livable cities. This represents a significant and positive change from past federal policy. But there is more work to be done.

Republican control of the House of Representatives is unlikely to simplify the extension of many of the new programs undertaken over the past two years — from high-speed rail to TIGER. Though these programs have faced some controversy and should be made more transparent, they have been well-managed, largely fair in their distribution of grants, and, crucially, have spread funding to cities across the country, in both Red and Blue states. In order to assure their future, President Obama will have to articulate their positive effects nationwide and advance ways to fund them that appear bipartisan and consensus-worthy.

Will he make the effort to do so when the nation has so many other pressing needs? Is there enough political support on either side of the aisle to maintain a major federal commitment to transport policies that do not revolve around the construction of highways?

I should note as a postscript that Secretary of Transportation Ray LaHood, who had no concrete previous transportation experience, has taken to his job quite seriously and is deserving of praise. Though in his previous post — as a congressman from Peoria, Illinois — he represented an area relatively unfamiliar with the mobility needs and problems of the nation’s biggest cities, he has proven himself to be a strong advocate of transit and intercity rail programs. Compared to the experience under President George W. Bush, Mr. LaHood has been practically a dream; Mr. Bush repeatedly asked Congress to reduce expenditures on Amtrak to zero (the legislature fortunately declined to do so) and the Secretary of Transportation in his later years, Mary Peters, almost shut the doors on one of the nation’s biggest and most important transit projects, the extension of the Washington Metrorail to Dulles. Similarly, Ms. Peters was unwilling to spent federal money on streetcars and hoped to replace most light rail plans with cheaper bus rapid transit lines. What a change we have seen in Mr. LaHood.

High-Speed Rail United Kingdom

U.K. Government Confirms High-Speed Plans

» Country’s second high-speed rail line would speed commuters from London to Birmingham in 49 minutes; extensions to Manchester and Leeds are planned.

After seven months in power, the United Kingdom’s Conservative-led government has endorsed the previous Labour Government’s plans for a high-speed rail link between London and Birmingham, a connection that will reduce running times between the country’s two largest metropolitan areas from 1h20 to less than fifty minutes. In addition, the Department for Transport, led by Phillip Hammond, has recommended the eventual extension of the route northeast towards Leeds and northwest towards Manchester in a 335-mile Y-shaped corridor to cost upwards of £30 billion ($46 billion) to construct.

The Conservative Government’s endorsement of this HS2 route confirms practically universal political support for the high-speed project in Britain and indicates that construction will get underway in 2016. Upon entering power, the Conservatives sent mixed messages about their interest in devoting a huge percentage of the country’s budget to this project; this week’s news demonstrates significant political support from the right-wing for the program.

The route is to be designed to allow trains to travel at speeds up to 250 mph and significantly relieve the West Coast Main Line, which carries 75 million passengers a year and which is expected to reach capacity by 2024, despite having been recently reconstructed at a cost of £13 billion. The new line will include a link to the existing HS1, which connects London to the Channel Tunnel. At completion, HS2 will allow 3h30 travel times between London and Glasgow or Edinburgh in Scotland and 3h00 trips between Paris and Birmingham.

Up to 15 trains per hour will terminate at a 10-track station added to the existing London Euston, carrying up to 16,500 passengers per direction per rush hour. A spur to Heathrow Airport is planned.

Though the primary purpose of the new rail link will be to reduce travel times throughout Great Britain, the Department for Transport has argued that it would also allow commuters to live in places like Coventry and Milton Keynes and work in London. Those cities are respectively 100 and 50 miles from the capital. It is worth questioning whether it makes sense to encourage such long-distance commuting, no matter how quickly it can be done. Indeed, though one of the stated goals of the high-speed train project is to reduce carbon emissions by reducing the number of automobile and airplane trips, long-distance work commutes are energy intensive no matter the mode used.

HS2 is also likely to see mounting criticism from communities along the line that will be affected by the construction of the project and the operation of the trains. The expansion of Euston Station will force several hundred families to move away from their homes in London; meanwhile, as the trains travel across the Chilterns and Warwickshire, they are likely to produce an uncomfortable increase in noise for up to 50,000 people. Though Mr. Hammond has reworked half of the route in response to citizen concerns and argued that the project will be attractively designed when built, he may face mounting criticism from within his own party if the project moves ahead as planned.

Nonetheless, the British high-speed rail project is likely to be a successful enterprise. HS1, which was completed in late 2007, has far fewer riders than HS2 is expected to carry but the services that use it (Eurostar and Southeastern High-Speed) are operationally profitable. Its huge £5 billion construction cost (including the £800 million renovation of London St. Pancras Station) has been partially paid off through the £2.1 billion 30-year concession announced last month — and new development expected around the London terminus, Stratford International, and other stations will add to the benefits. Similar or better results can be expected for the new line.

The government’s assertion of the importance of a link between HS1 and HS2 will add to value of both lines. By allowing direct service between central England and Paris, Brussels, Amsterdam, or other continental cities, this connection — to be tunneled under north London — will encourage more air travelers from outside of London to switch to the train.

Moving tens of thousands of daily travelers to the new line will allow the West Coast Main Line to be freed for local, regional, and freight services. The creation of new terminals in London, Birmingham, and the other cities served will encourage more downtown development. The government recognizes the economic benefits of increased spending on mobility infrastructure.

To put the United Kingdom’s project in perspective, the government is planning to spend more than $40 billion on a rail line that will connect four metropolitan areas — London, Birmingham, Manchester, and Leeds — whose collective population amounts to about 22 million. California’s similarly priced fast train will in its first phase link five metropolitan areas — Los Angeles, San Francisco, San Jose, Bakersfield, and Fresno — whose inhabitants number about 21 million. Future phases to Stockton, Sacramento, Riverside, and San Diego will add another 10 million to the service area.

If a Conservative government in the United Kingdom is willing to fund its project, in spite of massive cuts to the rest of the public budget, it’s hard to understand why bipartisan agreement in favor of investment in U.S. infrastructure in the form of high-speed rail cannot be assembled.

Image above: Trains at London’s Euston Station, from Flickr user Matt Buck (cc)

Congress DOT Finance

To Ensure Continued Funding, Limiting Expectations on Federal Transportation Reform

» Brookings’ Robert Puentes offers up a two-year reauthorization bill to quell conflict in the Congress over paying for transportation.

After two years of discussions about how to reform the system by which the federal government distributes transportation funding, the debate remains stalled: There is no consensus in Washington on just how much should be spent on transportation, what modes should be financed, and how revenue for the program should be collected. Though then-Chairman of the House Transportation and Infrastructure Committee James Oberstar (D-MN) in 2009 proposed a $450 billion six-year bill, his initiative was ignored by the U.S. Senate and put off by the White House, which had other priorities. Highway and transit funding have been put on life support, financed through $34 billion in infusions from the general fund to support short-term extensions of the SAFETEA-LU bill first passed in 2005.

The arrival of a new Republican majority in the House of Representatives complicates the matter further, as that caucus has been even more hostile to tax increases than the Democrats once in control. There is virtually no interest on either side of the aisle for a fuel tax increase to pay for better transportation infrastructure. And the Obama Administration’s focus on livability and high-speed rail — two features once expected to be featured in any new transportation bill — is not shared by many conservatives, forcing the question of how a compromise bill can be structured to support both Democratic and Republican priorities, especially in the run-up to the 2012 presidential election.

Robert Puentes, Senior Fellow at the Brookings Institution, has introduced a new proposal that attempts to skirt around the problem by implementing a two-year transportation reauthorization bill that relies on existing funding alone and makes only minor changes to the manner in which corridors are financed. Not coincidentally, it would come up for reconsideration only after the 2012 elections. This plan, though so far not endorsed by any members of Congress, nevertheless represents a potentially fertile ground for compromise and could guarantee federal support for transportation investments until at least 2013.

Puentes notes that existing funding for transportation, including receipts from the fuel tax and the infusions from the general fund, should be adequate to maintain existing levels of federal spending until 2013. Therefore, he argues that the question of how to increase those expenditures in the long term (vitally necessary) should be put off until the political storm has passed.

In the meantime, the two-year reauthorization, which Puentes has labeled SAFETEA-TWO, would make minor improvements to the existing law. Metropolitan areas that invest in their own transportation systems such as through the implementation of local-option sales taxes would receive incentives. Highway trust fund dollars distributed automatically to states by formula would be transferable to pay for rail operations. The government would streamline distribution of government infrastructure financing programs such as TIFIA, Private Activity Bonds, and Railroad Rehabilitation and Improvement Bonds, allowing interested bodies to apply for more than one program at the same time. Big, multi-corridor projects such as L.A.’s 30/10 program — currently split up into a number of pieces, limiting their potential implementation — would be fundable through the structure. Public-private partnerships would be encouraged through a special office. And out-of-date programs like the Appalachian Development Highway System would be put to rest.

Puentes also suggests that the Obama Administration’s discretionary transportation funding programs — including TIGER and high-speed rail grants — are not adequately transparent and should be altered to encourage the use of performance outcome measures and cost/benefit analyses. Of course, the new Republican House majority has not laid out its particular interest in extending the lives of those programs. Keeping money flowing for highway construction seems thus far to be the main priority.

On the whole, these are all reasonable ideas: They would provide marginal improvement in the manner in which transportation dollars flow from Washington and they would offer states the assurance that their highway and transit funding is guaranteed — at least for the next two years. They would also set the standard for the next transportation bill, incorporating objective standards to judge the best investments for any one corridor.

The basic principle underpinning Puentes’ plan — that passing a full new transportation bill now is too politically difficult — is hard to dismiss. TEA-21, which preceded SAFETEA-LU, was extended 12 times over the course of almost two years, so there is precedent for delaying action on transportation legislation. But is there a substantive enough difference between the “reauthorization” he is proposing and the extensions currently being passed by the Congress? Is it worth spending potentially months negotiating the outlines of a bill that would be in effect for only two years and that fails to resolve the more basic problems facing the U.S. transportation system, namely a lack of adequate funding?

Puentes’ proposal does advocate funding further research into alternative funding mechanisms, like a vehicle miles traveled fee. And it suggests that a long-term bill to be passed in 2013 incorporate two programs, one focusing on maintenance of the existing system and another on expansion of the system. But it is hard to see how passing a two-year reauthorization would reduce the conflict between the parties about how to fund transportation and what transportation to fund. After all, no matter what happens in the 2012 elections, there will still be disagreements about increasing taxes, and there will remain questions about whether to invest more in highways or transit. These problems will be unresolved.

Nonetheless, a two-year reauthorization may be the only feasible option for now, as the Congress seems likely to spend most of the next two years fighting over what programs to cut to pay for to the just-agreed-upon $858 billion federal tax cut, seeing as how revenue increases are on no one’s agenda. Serious thinking about improving the nation’s transportation infrastructure will be delayed.

Cincinnati Dallas Fort Worth New Orleans Phoenix Streetcar

Streetcar Projects Advance Nationwide Thanks to Local Initiative

» In spite of questions over whether the federal streetcar program has a future and the death of a project in Fort Worth, local dollars are distributed to build new links in Cincinnati, Dallas, New Orleans, and Tempe.

Last week’s decision by officials in Fort Worth, Texas to halt planning work on the city’s streetcar line struck a blow to the nation’s nascent collection of modern streetcar lines, one of the Obama Administration’s biggest transportation policy moves. Local leaders backed down from a $25 million grant received from the federal government earlier this year, arguing that the city wasn’t ready to invest its own money in a project that some suggested shouldn’t be funded by taxpayers.

The decision reinforced the commonly heard argument that the federal government is encouraging a form of transportation that is not fully accepted by people on the ground. It is certainly true that Fort Worth was far from prepared to accept the grant from Washington when it was first distributed, as the city had yet to specify a route or identify a definite local funding source.

The disappointing news from Cowtown, however, was the exception to the rule this month as Cincinnati, Dallas, New Orleans, and Tempe worked to establish their own local revenue streams for major streetcar projects.

In Cincinnati, Mayor Mark Mallory celebrated the decision by Ohio’s Transportation Review Advisory Council to award the city’s planned streetcar line $35 million in state funds. After receiving a federal Urban Circulator grant this summer and dedicating corporate and local dollars to the line, Cincinnati is now ready to break ground on the first phase next year. Dallas, which won a $23 million TIGER grant for a new downtown streetcar link in February and later received more funding from Washington for an extension to its McKinney Avenue historic streetcar, now has $10.8 million more from the Regional Transportation Council to spend on both projects. And New Orleans, whose Loyola Avenue connection is fully funded by the federal government, is considering redirecting local dollars to build another line down Rampart Street. Millions of dollars in new development is already being directed to sites adjacent to proposed streetcar stops in New Orleans.

The funds once earmarked for Fort Worth are likely to be redistributed by the U.S. Department of Transportation to another more interested city like Washington, D.C., which has a major streetcar system planned but which has yet to receive any federal funds for its construction.

Meanwhile, the Phoenix metropolitan planning organization has agreed to move a 2.6-mile streetcar planned for Tempe to the region’s long-term transportation plan. Though the group will ask the federal government to cover half the project’s costs — likely to add up to about $160 million — this represents a concrete commitment to spend local dollars on the project. Ten years ago, the only city in the country that would have agreed to such a major engagement was Portland. Other cities that have received U.S. funds and which are likely to move forward with their own projects over the next few years include Atlanta, Charlotte, Detroit, Salt Lake City, St. Louis, and Tucson.

Together, this news represents a strong endorsement for streetcar projects at the local level: Interest in streetcar construction extends beyond the boundaries of the nation’s capital. The mode’s expansion into metropolitan areas nationwide is genuinely supported by a whole bevy of citizens and leaders from coast to coast, willing to put up their own funds for projects that they think will improve their communities’ development patterns and mobility options.

Nevertheless, future federal support for streetcar projects has been put into question by the arrival of a new Congress that clearly does not share the Obama Administration’s enthusiasm for this particular mode of transportation. New House Transportation and Infrastructure Committee Chairman John Mica (R-FL) has supported expanding the federal pot of funds for transportation, but he has also argued for increasing Congressional oversight over executive agencies such as the Department of Transportation. The grant programs that have contributed mightily to the build-up of streetcar networks — TIGER, Small Starts, and Urban Circulators — currently give the Secretary of Transportation (Ray LaHood) decision-making powers over which projects to fund. Mr. Mica has implied that he thinks such decisions should be made by legislators; would a new Republican majority in the house choose to spend that money on streetcars?

Democrats have picked as their ranking member on the Transportation and Infrastructure Committee Representative Nick Rahall (D-WV), someone who, to put matters mildly, has not made much of an effort to demonstrate his support for alternative transportation. He doesn’t seem likely to be a big voice in favor of devoting more of Washington’s money to streetcars.

Meanwhile, there is no evidence that the Congress has any interest in making room for further discretionary grant programs at all, considering the complete lack of consensus on how to fund maintenance of the nation’s infrastructure, let alone expansions in the form of streetcars.

Nonetheless, the clear commitments given by some localities to their own streetcar programs indicate that there is a future for such transportation in the United States, even if Washington takes its hands off.

Finance Hong Kong Metro Rail

Hong Kong’s Expanding Metro a Model of Development-Funded Transit

» New extensions in central Hong Kong will be mostly funded by development around future stations.

As one of the densest places on earth, it is no surprise that Hong Kong is a transit city, with over 90% of journeys made by public transportation. This concentration ensures high ridership on the city’s extensive MTR metro system. Yet it also increases the cost of line expansions, since building new projects in places that are already packed with people necessitates the creation of tunnels and requires expensive environmental and social remediation.

Hong Kong, however, is going about constructing new projects at a steady pace. At the end of last month, the MTR transit agency approved the construction of the 4.3-mile South Island Line, which will provide service to Aberdeen and other sections of the south side of Hong Kong Island. In addition, the agency will complete a 1.6-mile extension of the Kwun Tong Line to Whampoa. Both will open for operations by 2015, with ground breaking scheduled for next year. The city already has a 2-mile metro extension to the West Island under construction.

All this is being built in the context of relatively high construction prices: The Kwun Tong Line is being constructed at a total cost of HK$5.6 billion, or roughly US$450 million per mile. Though that’s less expensive than what a similar project would cost in New York City, where the Second Avenue Subway is being built for more than $2 billion a mile, it’s on par with most other Western cities building new subways, unsurprising considering Hong Kong’s wealth. So what is this city’s secret? How is it able to continue building new metro expansions — and plan for more — when other cities are being forced to postpone their transit projects due to the recession and the resulting government cutbacks?

The answer is that the MTR, in association with the local government, has become one of the city’s major property developers. It has used profits from those new housing, commercial, and retail schemes to pay for part of the cost of constructing new subway lines. Along the urban rail lines, the MTR has funded dozens of new housing projects with 300 to 7,000 apartments each. The operations of the subway are entirely unsubsidized by the local government.

This approach — called “Rail+Property” by the MTR — does not involve the city simply handing over development land to the transit agency at no costs (land in Hong Kong is all owned by the government, though it is leased out to private individuals and corporations for long-term periods). Rather, it is expected to pay the government the land costs estimated based on a no-rail scenario. Thus the MTR is not forced to deal with the problems many agencies face when they use eminent domain to take land, such as escalating values in anticipation of the new transit service. Rather, it is rewarded for the added value it will produce once its new transportation project is completed.

For the South Island Line, the government has agreed to provide MTR development rights to a site at the former Wong Chuk Hang estate. In turn, the transit agency expects the government to pay for less than half of metro construction costs. The rest of the tab will be picked up by the
MTR. This process, which directly associates transit operator with transit-oriented developer, makes the financing and construction of new underground transportation links far more simple than the typical approach, which requires governments to use public tax funds to pay for most of the cost of transit projects. The latter funding mechanism, common in the U.S. and Europe, is politically difficult and financially troublesome, especially in times of increasing budget deficits.

Of course, the MTR is not alone in using this method to assume some of the costs of construction. In Paris, the government’s grand plans for a network of 96 miles of new lines, costing more than €20 billion, would be partially paid for by the creation of development districts around each station whose own existence is only possible thanks to the creation of the transit line. This is a reasonable way to fund a transit line, as it is paid for by the benefits it produces. In a typical U.S. city, the transit agency provides a significant boost to local property values when it invests in a new rail project and yet it is able to capture very little of that extra wealth created — and when it does, only indirectly through tax revenue increases. This slows down the development of many cities.

One of the difficulties in proposing a similar finance method in the U.S. is that there is a residual fear of letting the public sector (or even the only partially public sector, in the case of MTR) engage in land development. The memories of urban renewal and public housing remain fresh enough on the minds of enough Americans to dissuade them from wanting to repeat the process today. Thus the closest we’re able to get is a financing method like that being used for New York’s 7 Subway extension. There, the city has created what is essentially a tax-increment financing district in the area to be served by the line, and it will use those tax revenues to pay back the initial costs of the project.

Yet this indirect approach, which does not allow the transit agency to reap the full benefits of the value increase it has sowed, leaves too much room for massive developer profits and too little room for actually funding new transit lines. It is worth considering whether it would be worthwhile to allow a transit agency to engage directly in the creation of new developments around the stations it has built. If properly managed, such a system could result in better transportation for all and less of a constraint on the public purse.

I should note that Hong Kong may be a unique case. At the aerial map at the top of this article shows, it is hemmed in from all sides by natural features — the ocean, mountains, and parks — that force all new development to be quite dense. Similarly, most housing and commercial activities are stuck in the relatively narrow strip of land between the ocean and the mountains. That density and linear concentration removes space for potential transportation infrastructure and limits the amount of walking necessary for anyone who lives along a transit line that follows the rough line of urban landscape; this makes transit work better here than most place. All together, you have conditions almost ideal for transit-oriented development. You can’t just transpose the Hong Kong model on any place.*

* This paragraph was added after the initial publishing of this article.