Archive for the ‘transit’ Category

Land value impacts of Minneapolis light rail

January 14th, 2012 by Administrator

image credit: Steven Vance via Flickr (cc)

In 2010, the University of Minnesota’s Transitway Impacts Research Program released two studies of the impact of the Minneapolis light rail (“Hiawatha Line”) on real estate values. The residential study (pdf) estimated that houses near rail stations gained a total of $29.4 million more than houses outside the area, and multi-family properties gained a total of $17.7 million.  The  commercial/industrial study (pdf) estimates an increase of $20 per square foot (pdf) of building space, tho they do not extrapolate this to estimate the total impact.  Assuming for the moment that the commercial/industrial impact (which includes much of downtown Minneapolis) is double the total residential impact, we have a total land value gain of $141 million.

Now, that’s a nice amount of money, but building and equipping the rail line cost $715 million in total tax money, and it seems per page 32 of this big pdf to require about $15 million in annual operating subsidy from taxes.  Assuming the construction cost to be financed with bonds costing 4%, that’s an annual cost of about $44 million (in addition to fares collected.)  Can this be justified by a land value increase of $141 million?

It’s a question worth asking, but there are reasons the answer may be “yes, easily.” First, a big shortcoming of the studies is that they compare prices before the line started operating, in 2004, with prices afterwards.  It stands to reason, and has been established elsewhere, that real estate values start rising no later than the beginning of construction for a new rail transit line.

Second, real estate sales price may be the capitalized value of future expected net rent, after taxes, but is only indirectly related to gross rent.  The difference is taxes, not only the real estate taxes collected against the parcel, but also other taxes which operate to reduce rent.  Thus, increased real estate tax, sales tax, state income tax, and other taxes which may occur as a result of the transit line should be recognized as a benefit which the community receives (and collects!).

Finally, the studies look only at the localized effects within a mile of the station. Of course the greatest concentration of benefits will be found in this area, but a small percentage value increase regionwide, which could result from the rail line, could sum to a large amount but would not show up in these studies.

In conclusion, it is certainly possible that the community benefit of the Hiawatha Line, as measured by actual land value, far exceeds the cost of building and operating the  facility. Unfortunately, these studies do not actually test the proposition.

None of this is to say that transit investment always increase land value.  A project whose main purpose is to provide jobs and contracts, with little transportation benefit, might cost far more than the resulting increase in land values (if any).

Thanks to Bill Batt for the lead to these studies.

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Posted in land value, taxes, transit | No Comments »

Secret to adequate transit funding in half a sentence

January 5th, 2012 by Administrator

 

New York image credit: Mo Riza via flickr (cc)

New York image credit: Mo Riza via flickr (cc)

 

Hong Kong image credit: theloneconspirator via flickr (cc)

Hong Kong image credit: theloneconspirator via flickr (cc)

New York’s transit system, like those here on the U S mainland, finds itself in a financially unsustainable position.  Despite huge subsidies from taxation of productive activity, its managers claim a need for $10 billion additional capital funds, and the current year’s budget assumes a docile union as well as $35 million that appears imaginary.

And, like private-sector corporate managers, its chief has departed the troubled system for triple the compensation at a more prosperous organization, in this case the Hong Kong Mass Transit Railway.  Would you blame him?

For those of us who seek reliable transit funding from a source which does not burden productivity, the important point is what this relocated executive calls Hong Kong’s “sustainable financial model.”  And what is that? Simple, and no surprise to those who have been paying attention here.  The Hong Kong Mass Transit Railway Corporation “earns millions of dollars from real estate developments along its rail lines.”  That’s all it takes.  Collect some of the land value, which public transportation supports, to fund the operation at reasonable fares. [Oh, yeah, and get competent managers for the transit operation, but they don't mention that here.]

Source: Former M.T.A. Chief Recounts His Ups and the System’s Downs, New York Times, by Michael M. Grynbaum, Jan 4 2012.  Thanks to Metro Magazine for the link.

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Posted in taxes, transit | No Comments »

North America’s only full service railroad collects land rent

November 7th, 2011 by Administrator

It’s not just in Japan (and Vancouver, sort of) that land rent is used to fund railroads.

Photo Credit: Gator Chris via Flickr (cc)

Originally built by the Federal government and now owned by the State, the Alaska Railroad is “North America’s last full service railroad” because it operates, on its own tracks, with its own rolling stock, freight and passenger service. Revenue is just a bit more than enough to cover operating costs, but how to pay for the capital expenditures– equipment, track, facilities– which must be constantly renewed and improved to run the railroad smoothly? Part of the answer is collecting the land rent. The Railroad owns some 18,000 acres of real estate (see source below), for which it last year received just under $13 million in land rent (see page 34 of this pdf).   This compares to total capital expenditures last year of $73.1 million, with the balance covered from various kinds of grants, as well as operating profit.

ARR provides more information about their leased and leasable land here.

Of course, this is collecting only a tiny part of the economic rent the railroad generates, but at least it’s a source that will grow as the railroad improves.

Thanks to Trains magazine for the original tip.

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Posted in economic development, Georgist teaching resources, land value, transit | No Comments »

Transit advocates get more options

August 25th, 2011 by Administrator

Not more transit options; we’re still stuck with CTA bus, CTA rail, Pace bus, and Metra rail.  But now we have more advocacy options. None of them is easy to join. A biased summary (listed in descending order of web site quality) is:

  • If you believe transit’s main problem is that it doesn’t have enough money to spend, you can support the (newly-announced) Riders for Better Transit. It seems that you can’t exactly become a member; you can only click a box to show your support, and/or join the parent organization, Active Transportation Alliance.
  • If you believe that transit workers are good, kind, noble, and generous, but management is foolish, and, yeah, more money is probably needed too, you can join Citizens Taking Action.  The site gives no indication about how one could join, but does announce, and by implication invite one to, their next meeting.
  • If you think transit riders’ main problem is that transit investments and operations are poorly planned and poorly managed, a lot of money is wasted, and, if any more money is needed, it should come from a tax on land value, because land value reflects (among other things) the quality of public transportation, then you’re invited to support The Transit Riders’ Authority. Find where  it says “join TRA! Here’s a membership application:”  There is no membership application, but a PO Box, phone number and email address are given; perhaps they work.

 

 

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Posted in Chicagoland, transit | No Comments »

Are San Franciscans fatter than Chicagoans?

June 27th, 2011 by Administrator

Many have complained about cattle-car conditions aboard CTA trains, exacerbated by the few, small, and uncomfortable seats. The newest 5000-series cars are probably the worst in this regard, as nearly all the seats are longitudinal, so, if you manage to snag a seat, you’re stuck in a 17.5″ space with cta-rider-bodies on each side of you.  If you’re only 17″ wide (including your arms, unless you detach those for transport), you’ll fit OK provided that you remain quite stationary. And altho the total number of seats is said to be the same as was provided in the 3200-series cars, that’s fewer than any earlier models.

Not that CTA conducted any surveys or hearings prior to deciding on this seating configuration.  For comparison, consider BART, the Bay Area Rapid Transit serving north-central California. Their seats are 22″ wide.  Riders have indicated a willingness to cut that down to 20″, but no further. How does BART know this?

Because they conducted a survey. They took some seats around and asked folks what they thought. They also provide comparisons to seats in other cities, as indicated on this pdf.

Perhaps this has something to do with the fact that the BART board is elected, not appointed.

Have CTA apologists anything to say here?

 

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Posted in Chicagoland, transit | No Comments »

Who needs federal transit funding?

April 15th, 2011 by Administrator

Not the Washington DC streetcar project, which at a cost of $1.5 billion is expected to raise land values by $5 to $7 billion.  (This is the increase in value of “existing properties.” Double it to include the value of new construction.) So collecting just 30% of the increase should be sufficient to pay the cost.

A lot of details are missing from the source article, and so far I don’t know how to get the  study which it describes.

Thanks for Alanna Hartzok for the tip.

 

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Posted in economic development, land value, public policy--nec, taxes, transit | No Comments »

Short term loan at 0%, and how you can get one

February 3rd, 2011 by Administrator

Not from the Federal Reserve; surely none of my readers are “too big to succeed” and therefore qualified for direct quantitative easing. But an arm of the U S Government actually will sell you cash, in $250 increments, accepting credit cards without surcharge (you get any usual rebates or bonuses that your card provides) and with free shipping. The only catch: Your cash is in the form of dollar coins.

Stated purpose of the program is “to make $1 coins readily available to the public, at no additional cost, so they can be easily introduced into circulation—particularly by using them for retail transactions, vending, and mass transit.”  (Your government does not want you to just deposit them in the bank, but CTA farecard machines accept them.)  Altho coins cost more to produce than dollar bills, they save your government money because they last a lot longer.

For those of us who do not love the Federal Reserve, there is also the consideration that the coins are issued directly by your government, the closest thing we have to greenbacks (more about the advantages of greenbacks).

This program apparently has been going on for a couple of years; I learned about it recently from this old post.  It really works; I placed an order January 17, it arrived (by ordinary U S mail!) about a week later, and I will pay for it next week.  Presumably you could roll it over by placing another order.

Of course, what with credit cards, checks, direct bank transfers, etc., I don’t spend $250 cash in any month.  But maybe we’d all be better off if there was more use of the anonymous cash economy, which this seems to encourage.

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Posted in economic development, investments, mafia, poverty, transit | No Comments »

Housing costs and land use regulation

January 30th, 2011 by Administrator

Steve Keen did the great service of reading the FCIC report and confirming my impression (obtained without reading it) that it was not worth reading.  And a few posts prior, he reported that Wendell Cox and friends are out with another edition of their annual Demographia report, showing, once again, that the ratio of house cost to income tends to be higher in metropolitan areas where housing development is relatively restricted, and lower where developers find it relatively easy to get clearance to build. (Their report is international in scope but I will limit my comments to their analysis of US conditions.) (more…)

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Posted in Housing, land value, transit | No Comments »

Grant funding and transit efficiency

January 27th, 2011 by Administrator

A couple of years back I attended a conference where somebody– I think it was a couple of Chicago payrollers– reported on the bus rapid transit system of Curitiba, Brazil.  It’s considered by many (and I have no information to the contrary) to be a cost-effective implementation of pretty good transit service (better than we have, anyhow) at modest cost. They actually got to compare notes with the former Mayor who is considered most responsible for the design of the system.  He was quoted as saying, “I’m glad we don’t have as much money as you have in Chicago, because surely we would waste it.”

What reminded me of this most recently is this release from Sen. Durbin’s office, anouncing or reannouncing the awarding of various grants. In particular:

Illinois Department of Transportation (Chicago Metro): $341,694 in TIGGER II funding to install automatic shut-down and start-up systems in an estimated 27 locomotives in the Metra fleet, which operates in the Chicago metro area. Metra estimates that by shutting down instead of idling the locomotives, the automatic systems could save an estimated 800,000 gallons of diesel fuel and reduce CO2 emissions by an estimated 80,000 tons per year.

If the information is to be believed, an investment of $341,694 “could save” 800,000 gallons of diesel per year.  Now, I don’t know how reliable that estimate is, but let’s assume it’s way too high, really only 200,000 gallons will be saved.  And what does Metra pay for diesel, surely not less than $2.50/gallon.  On these very conservative assumptions, it would take less than 9 months’ fuel savings to pay for the devices.  (And that’s not even considering the savings from not having to go thru the grant process.)  And if they lacked the cash, they certainly could have borrowed it, paid extortionate interest, and still come out ahead in a year.

So why didn’t Metra do that?  Are they stupid? Or corrupt? Of course I have no way to know, but I think there’s another reason.  I can imagine how the decision was made:

Technical staffer:  We can buy shutoff devices, pay for them with fuel savings in less than a year.  May I place the order?

Manager: Would this qualify for TIGGER funds?

TS: Huh?

M: It’s a grant program.  I don’t remember where the acronym comes from, but it’s federal money we can spend on things that save energy and reduce emissions. This sounds like it would qualify.  The Board prefers that we use federal money instead of Metra’s “own” money.

TS: I suppose it would qualify.  What do I do now?

M: Go talk to the Metra Department of Getting Grants.  They’ll take care of it, you’ll just have to get them some pictures, brochures, maybe some other paper.  Shouldn’t take you more than a week or two.

TS: Well, OK.  Will I get a bonus for this?

I have no idea who will get a bonus, but I know who is spending more and waiting longer than necessary for a cost-effective investment.

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Posted in Chicagoland, Government gone wild, transit, Unintended consequences | 1 Comment »

Missing from Chicago’s Transportation Platform

January 8th, 2011 by Administrator

Eight area advocacy organizations have issued “Chicago’s Sustainable Transportation Platform,”  recommending public policies for a better transportation system. Since I’m a paying member of at least two of the eight, and on the mailing list of a well-funded third, I had hoped that maybe a few sensible things would be included.  You can decide for yourself which of the ideas are sensible (“Design streets that are safe and convenient for all users.”).  Pretty much all of them could be construed as “Create additional jobs and funding opportunities for us and our friends,” but that’s true of most public policy discussions.

I’m mainly concerned about what’s missing, for instance:

  • Obtain transit funding from those who benefit from transit service– the owners of land and other privileges in areas served by transit.
  • Reduce the number of free and subsidized parking spaces provided at public and nonprofit facilities, including libraries, police stations, educational and medical institutions.  Use the resulting revenue to reduce taxes on productive activity.
  • Improve transit governance by requiring the majority of governing boards of CTA, Pace, Metra, and RTA to be regular transit users, and no board member who takes fewer than five transit trips in a month can receive pay for that month.

Other ideas?

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Posted in Chicagoland, Government gone wild, mafia, taxes, transit | No Comments »
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