Transit as a Development Tool, but in Whose Interest?

Even if land speculators could assemble the financing for new transit lines, decision-making about alignments should probably remain the role of the public sector.

South Lake Union Streetcar in Seattle Flickr user jeffwilcox

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If dense, inner-city communities are regaining the popularity they held decades ago thanks to demographic trends favoring smaller households and shorter commutes, private developers need to respond by providing more housing in walkable urban neighborhoods, rather than the same old suburban sprawl we’ve become used to. In order to do that, they’ve got to fund transit improvements through special assessment districts that would coordinate the construction of new buildings with the implementation of better public transportation systems such as new streetcar lines.

At least that’s the gist of Christopher Leinberger’s provocative piece in June’s Atlantic Monthly.

Leinberger’s thoughts on how to advance this sort of transit-centric urbanism are inspired by the example of housing developers from the beginning of the 20th century, who subsidized money-losing streetcar lines into new neighborhoods (“streetcar suburbs”) to encourage people to buy or rent. Without the rail service, it was assumed, the value of housing plots would decline substantially.

This argument is relevant in today’s environment; during the recession, housing values declined virtually everywhere, but the downfall was far more significant in the exurbs than in the inner-city, where land values remained mostly solid. There is a strong demand to live in walkable, in-town neighborhoods. The problem is that there aren’t enough of them available on the market.

But Leinberger’s solution — that developers could benefit by spending their own money to build transit — is problematic. For one, it fails to account for the fact that most land speculators move on to new work once they’ve sold off their projects to home buyers. Who would continue to subsidize the operations costs of the new transit systems once the land has been sold? Is it fair to expect municipal transit operators to take over the servicing of privately developed systems?

Second, Leinberger’s argument assumes that developers would be either wealthy enough or powerful enough to assemble the necessary right-of-way for said transit and then build it. Noting Detroit’s recent public-private streetcar deal, he posits that the federal government should be more willing to fund private-initiated public transportation, and it’s true that involvement from Washington would make such investments far more feasible.

But few developers are able to assemble land development plots large enough to make investing in a new transportation system necessary, especially in dense urban areas, where most new construction requires only a block or two of space. If the new construction is done out of town, developers would have to buy the use of transit rights-of-way all the way into town, a probably too-expensive proposition to be considered seriously.

And relying on private developers to take the initiative in moving forward with new transportation projects removes the planning process from public hands, reducing the possibility of democratic involvement in setting investment priorities. By allowing the federal government to fund development-centric transit projects, it may be benefiting private land speculators more than the people who actually need better public transportation: the poor, people who are unlikely to be buying in the new transit-served developments.

With limited funds for new infrastructure investment, the government must guarantee that its money is being used in the most effective way possible, and it’s hard to imagine how linking up with speculative land development fits within that framework.

All that said, Leinberger’s fundamental argument — that transit can serve as a useful tool in spurring dense urban growth — is sound.

But his assumption that the private sphere can or even should take the lead in building transit is misplaced. Rather, public authorities are probably best positioned to do so. By building new transit lines that hit areas that can be redeveloped and places that are inhabited by low-income, transit-dependent people, cities can develop systems that fulfill both needs.

Cincinnati’s streetcar, which received funding from the local city council this week, is an example of how this can be done. The line, which is planned for operations in 2012, will run from the city’s riverfront to the zoo, via downtown and the University of Cincinnati. At the river, it will encourage the further growth of a huge redevelopment scheme called The Banks; downtown, it will run past dozens of vacant or under-used blocks primed for investment; passing through the Over the Rhine neighborhood, it will serve a number of low-income inhabitants; at the University of Cincinnati, it will hit a highly transit-dependent population.

This approach gives municipalities greater control over where to promote higher-density growth. Though this may benefit certain developers owning land in the right places, it ensures public involvement in determining where to place new transit lines and the buildings that will follow them, rather than passing that power — and federal dollars — over to the private sector.

By taking the reins of the streetcar’s development, the city has ensured that it serves some of the area’s most transit-needy. But by directing the system’s route towards major private development sites as well, the streetcar will provide a number of opportunities for more of the urban growth so in demand today.

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Yonah Freemark is a senior research associate in the Metropolitan Housing and Communities Policy Center at the Urban Institute, where he is the research director of the Land Use Lab at Urban. His research focuses on the intersection of land use, affordable housing, transportation, and governance.

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Tags: real estatebuilt environmentdetroitstreetcarspublic-private partnershipsyonah freemarkcincinnatigrassroutes

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