urban development on railway‐served land: lessons and opportunities for the developing world

8/8/2019 Urban Development on RailwayServed Land: Lessons and Opportunities for the Developing World

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Urban Development on Railway-Served Land:

Lessons and Opportunities for the Developing World

Robert CerveroWORKING PAPER

UCB-ITS-VWP-2009-13

December 2009


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UrbanDevelopmentonRailwayServedLand:

LessonsandOpportunitiesfortheDevelopingWorld

RobertCervero

UniversityofCalifornia,Berkeley

December2009


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1. Introduction

Theoryandexperiencesshowthat,undertherightconditions,railtransitinvestments

canpowerfullyshapecitiesandregions.Amongtherightconditionsareserioustraffic

congestion,apermissiveregulatoryenvironment,andfrequentandreliabletransitservices.

Trafficcongestionisapreconditionbecauseonlythencanrailservicesespeciallyondedicatedandgradeseparatedrightsofwayprovidetraveltimesavingsrelativetothe

privatecar.Zoningandotherregulatorytoolsmustalsobeinplacetoallowbuildingdensities

tobestackedupinandaroundrailstations.Andservicesmustbedependableiftransitisto

appealtocarowning,choiceconsumers.

Partofthereasonforrailtransitscityshapingpowersisduetomarketforcesandpart

duetopolicyinterventions.Byenhancingaccessibilitytheabilityofthoseliving,working,or

shoppingrailnearstopstoquicklyreachdesireddestinationsrailservicesincreasethevalue

anddesirabilityofpropertiesinandaroundstations.Thereis,however,alimited,finitesupply

ofparcelswithsuperioraccessibilityinanycity.Tothedegreearailinvestmentconfersaccessibilitybenefits,marketpressurestointensifydevelopmentaroundrailstationsraiseland

values.Effectively,theaccessibilitybenefitsgetcapitalizedintothepriceofland.Thisisnot

automatic,however.Insomecitiesofthedevelopingworld,likeMexicoCity,developmenthas

oftenturneditsbackonmetrostationsincommercialdistricts.Thishassometimesbeendue

tothedisamenitiesassociatedwiththeinformaleconomye.g.,streetvendors,illicitactivities

(perceivedorreal),andcasuallaborwhooftencongregateinbusyareaslikestationareas.

Classdivisionsandsecurityconcernscanmeanlowerdensitygradientsinandaroundstations.

Marketpressuresbythemselvesrarelyproducewhatiscommonlyreferredtodayas

TransitOrientedDevelopment,orTOD(Calthorpe,1993;BernickandCervero,1997;Cerveroet

al.,2004).Toleverageprivateinvestmentsinandaroundstation,proactivismandacertain

amountofrisktakingonthepartoflocalgovernmentsareoftenneeded.Supportiveand

complementaryactivitiessuchaspermissivezoning,underwritingoflandcosts,helpwith

landassembly,andtargetedinfrastructureinvestmentslikesidewalksandlighting

improvementsinstationareasareparticularlyneededinmarginalorstagnanturbandistricts

wheremarketdemandfornewdevelopmentisweak.

2. RailInfrastructureandGrowthImpacts:Issues

Onefirstissuesencounteredinaddressingthedevelopmentimpactsofrailtransitinvestmentiswhethertheyaregenerativeorredistributivei.e.,dotheseinvestmentscreate

newandrealeconomicgrowth(byenticinginvestmentsintoaregionthatwouldotherwisenot

occur)orinsteadredistributegrowth(e.g.,fromonepartofaregionunservedbyrailto

anotherpartofaregionthatis).Simplestatisticsrevealapositiveassociationbetweenpublic

transitinvestmentsandregionalincome.Dataon52globalcitiesfromtheMobilityinCities

DatabaseoftheUITP(InternationalAssociationofPublicTransport,2006)showsamoderately


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strongandpositiveassociationbetweenGrossDomesticProduct(GDP)andinvestmentsin

publictransportexpressedonapercapitabasis(Figure1).Whilecorrelationdoesnotmean

causation,transportinfrastructureappearstomatter:GDPpercapitatrendsupwards63for

everyEurospentonpublictransportperinhabitant.Thisstrongpositiveassociationofrail

investmentsandservicesoneconomicperformancelikelyreflectsthedominanceofEuropean

citiesintheUITPdatabase(46ofthe52observations).ManyEuropeancitiesboastworldclassrailwaysystemsmatchedbyhighridershiplevels(Cervero,1998).Onlywithhighqualityrail

servicescanthekindsofagglomerationeconomiesbeachievedthatdrawshighvaluedadded,

knowledgebasedindustriesinfinance,legalservices,andprofessionalconsultingtothecentral

city.EvenintheU.S.,studiesshowthatinbig,densecitieswithrobustandgrowingeconomies,

railtransitinvestmentsoftenyieldhigheconomicratesofreturn(CambridgeSystematics,Inc.

andApogeeResearch,1996).Thuswhilesomeanalysts(Giuliano,2004;Forkenbrock,2002)

contendthattheimpactsoftransportinfrastructuretendtobemoreredistributivethan

generative,becauserailsystemssupportveryhighurbandensities,theagglomerationbenefits

thatoccurfromanyspatialredistributionthatmightoccurcanbesubstantial,certainlymoreso

thaninthecaseofroadsandhighways.ThehighrisefinancialdistrictsofglobalhubslikeNew

YorkCity,Tokyo,HongKong,andLondoncouldnotbesustainedwithoutrailservices.There

canbenodoubtthatthepresenceofrailhasbeenbothaprerequisiteandaresponsetovery

denseurbanagglomerationsinsuchcitiesi.e.,theyarecodependent.Andtherecanalsobe

nodoubtthatmoreregionalgrowthoccurredduetotheknowledgebasedandservice

industriesfoundinthedowntownsofsuchrailservedcitiesthanwouldhaveotherwise

occurredandthatresultingagglomerationeconomieshaveincreasedregionalincomeand

wealth.Thuswhilerailmightstronglyredirectwheregrowthoccursinaregion,the

redistributionlikelycreatessignificantgenerativeeconomicgrowth.

Figure1.ScatterplotsofGDPpercapita(inEuros)andAnnualPublicTransportExpenditures

percapita(includingcapital,operations,andmaintenance),51GlobalCities,2001.


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Anotherissuefoundintheliteratureontransportinfrastructureandurbangrowthis

whetherinvestmentsarealeadoralagfactor.Dorailwayinvestmentsspurfutureurban

growthordoinvestmentstendtobetargetedatareasexperiencingrapidgrowthandincreased

trafficcongestion?Whilenodefinitivestudyhasbeenconductedonthisquestionforrail

transit,inthecaseofhighwayinvestments,therelationshipsaremixed.Numerousstudies

haveshownhighwayinvestmentsinducebuildingactivities(Cervero,2002),someworksuggeststheoppositealsoholdsonestudy,forexample,showedthathighwayinvestmentsin

metropolitanChicagocouldbebetterexplainedbypopulationgrowthratesadecadeearlier

thanviceversa(UrbanTransportationCenter,1999).Arelatedissueiswhetherrail

investmentscrowdinorcrowdoutprivateinvestmentsi.e.,wouldasmuchregional

economicgrowthoccurinthetaxdollarsusedtofinancerailwayinvestmentsremaininthe

privatesector?Conventionalwisdomholdsthatinrapidlygrowthareaswithstrongrealestate

markets,crowdinginisastrongerforce(Cervero,1998).Whatisunequivocalistheobverse:

railwayinvestmentsareincapable,bythemselves,ofturningaroundstagnantorlaggingreal

estatemarkets.

Whiletheaccessibilitybenefitsconferredbyrailwayinvestmentsdeterminesthedegree

towhichlandusechangesoccur,accessibilityisstronglyinfluencedbythetypeoftransit

technology.Subwaysandothergradeseparated,dedicatedrightofwayservicesenjoyspeed

advantageswhichforanexpansivenetworkmeanhighaccessibilityi.e.,theabilitytoreach

numerousdestinationsquickly(particularlyincomparisontotheprivatecar).Howeverfaster

speedsarealsoduetorailslowercoefficientoffriction,whichwhencombinedwithrails

sloweraccelerationanddecelerationtypicallyresultsinlongerstationspaces.Froma

standpointoflanduseimpacts,thecombinationofhighregionalconnectivityandlonger

stationspacingtranslatesintodenser,morenodaldevelopmentthanothertransitmode

(Figure2).Mixedtrafficlightrailoperations,incontrast,conferfewertraveltimesavings

relativetothecarandthusfeweraccessibilitybenefits.Thisinturnweakensmarketpressurestointensifyusesaroundstops.AndwithBusrapidtransit(BRT),stopsareoftenclosertogether

(duetofasteraccelerationanddecelerationofrubbertiredvehicles),whichtendstocontribute

tomorelinealpatternsofgrowthsuchasCuritiba(Figure3).

3.CaseStudySummaries:LandUseImpactsofHeavyRailInvestments

Empiricalevidencelargelyconfirmstheoriesaboutthelanduseimpactsofrailway

investments.ThissectionfirstreviewsexperiencesinNorthAmerica,contrastingcaseswith

proactiveregionalplanning(Toronto,Canada)versusweakregionalplanningoversight(SanFranciscoBayArea).Americasmostsuccessfulexampleofproactiveintegrationofheavyrail

andlanddevelopmentWashingtonD.C.smetrorailisalsoreviewed.Thisisfollowedbytwo

successfulEuropeancasesofusingheavyrailinvestmentstochannelgrowthaccordingtoa

longrangeregionallandusevisionnotably,Copenhagen,DenmarkandStockholm,Sweden.


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Figure2.RelationshipbetweenTransitTechnologiesandUrbanDevelopmentPatterns

Figure3.LinealDevelopmentPatternsofBusRapidTransit,Curitiba,Brazil

3.1 Toronto:LeveragingaMetrorailInvestmentThroughProactivePlanning

Toronto,Canada,isoftenheraldedasthebestNorthAmericanexampleofrailtransits

cityshapingabilities.Theurbanformimpactsoftheinitial24kilometersubwaysystem,

openedoverthe1954to1966period,wereimmediateanddramatic.Duringthesubwaysfirst

decadeofoperations,aboutonehalfofhighriseapartmentsand90%ofofficeconstructionin

thecityofTorontooccurredwithinafiveminutewalkofatrainstation(Heenan,1968).The

subwaynotonlytriggeredthedevelopmentofvacantorunderusedareas(somewithinafew

kilometersofthecitycenter),butitalsospurredtherecyclingofdecayingintowncommercial


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buildingsandblightedparcels.

OneofthegreatestaccomplishmentsofTorontossubwayhasbeentostrengthenthe

centralbusinessdistrict(CBD)partlyaconsequenceofaradial,downtownfocusedsubway

systembutmainlyaresultofstrategicregionallanduseplanning.TorontosCBDhasamong

thehighestlevelsofemploymentandretailprimacyinNorthAmericai.e.,veryhighsharesofregionaljobsandretailactivitiesinthecore.AstrongCBDhasinturnedspawnedhigh

ridershiplevelsabout65%ofalltripsenteringtheCBDandhistoricallywellover200transit

tripspercapitaperyear,higherthaninanyU.S.metropolitanarea,includinggreaterNewYork.

Theseoutcomesaredueinconsiderableparttothepresenceofaregionalplanningbody

(Metro)whosechiefresponsibilityhasbeentoorchestrateregionalgrowth,inparticulartheco

developmentofrailwayservicesandlanddevelopment.

WhyhasTorontobeensosuccessfulinmakingthetransitlandusenexuswork?The

ingredientstoTorontossuccesswerepartlyduetoexogenousforcesbutprimarilydueto

purposefulpublicpolicies(i.e.,endogenousfactors).Thechiefexogenousfactorwasgood

timingnotably,thesubwayinvestmentcoincidedwithaperiodofrapidgrowth(atitsheight,

45,000newresidentsperyear),meaningrailtransitwaswellpositionedtoshapewhere

growthoccurred.Additionally,manyoftheresidentswerelowskilledimmigrantsfromabroad

whoweretransitdependent(andwereprovidedsocialhousingsitednearsuburbanrail

stations).Theytendedtosupporttherailwaysystematthefareboxandtheballotbox.

Carefullyreasonedpublicpolicies,atboththefederalandnationallevels,also

contributedtothelandusesuccessesofTorontosrailwayinvestments.Federaltaxlaws,for

example,donotallowhomeownerstodeductmortgageinterestpaymentsandpropertytaxes

fromincometaxes,whichhasresultsinlowerratesofsinglefamilyhomeownership.Similarly,

Canadasnationalgovernmentdoesnotsponsorfreewayconstruction,asisthecaseintheU.S.,whichhasresultedinfewerfreewaylanemilesinCanadiancitiesthancomparablesizeU.S.

ones.Earlyfreewayrevoltsfurtherreducedtheautomobilesenvironmentalfootprintin

Toronto.Withoutquestion,however,theonefactorthatbestexplainsthesubwaysstrong

cityshapingimpactshasbeenproactive,coordinatedlanduseplanningandmanagement

conductedbyTorontosmetropolitangovernment.Whilezoninghasalwaysbeencontrolled

byindividualmunicipalitiesintheregion,themetrogovernmentretainedvetopowersover

locallandusedecisionsthatwereinconsistentwiththelongrangetransportationlanduse

plan.AmongtheinitiativesintroducedbytheMetrogovernmenttoleveragelanddevelopment

weredensitybusesforparcelsnearrailstations,limitsonparkandrideconstructionatnon

terminalstations,transferabledevelopmentrights(thatenableddensitiestobestackednearrailstations),andsupplementallandacquisitionthatenabledlocalgovernmenttoleaseandsell

landnearrailstopsbothtorecapturevalueandensurehighridershiplevels.


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3.2 SanFranciscoBayArea:BARTHeavyRailSystem

IncontrasttometropolitanToronto,growthintheSanFranciscoBayAreafollowingthe

1973initiationofregionalrailservicestheBayAreaRapidTransit(BART)systemhasbeen

shapedalmostexclusivelybyfreemarketforces.Theabsenceofaregionalplanning

counterparttoTorontosMetrohasleftstationareadevelopmentdecisionslargelyinthehandsofprivaterealestateinterestsandthewhimsofmunicipalzoning(CerveroandLandis,

1997).

TheoneimpactofBARTthatmostcloselyparallelsTorontosexperienceshasbeenthe

preservationoftheCBDastheregionsprimaryemploymenthub(i.e.,retainingitsprimacy).

DuringBARTsfirst20years,some2.6millionsquaremetersofofficefloorspaceandmorethan

60,000newjobswereaddedwithinkilometerofdowntownBARTstations.Thisgrowth

wouldnothaveoccurredwereitnotforBARTsimplybecausethebridgesthatconnectto

downtownSanFranciscocouldnotaccommodatetheadditionalcartrafficgeneratedbythis

dramaticemploymentgain.Theuseoftaxincrementfinancing(whereinallproceedsfromthe

taxbasearereturnedtothestationareastopayforotherpublicimprovements,suchas

landscapingandcivicplazas)wasinstrumentalinspurringdowntownofficedevelopment.

OutsideofdowntownSanFrancisco,BARThasbeenastrongerforcetoward

decentralizationthanconcentration.Byaddingnewlayersofaccessibilitytooutlyingareas,

BARTenabledmoresubdivisionstobebuiltthanwouldhaveotherwisebeenpossibledueto

limitsonfreewaycapacity.OtherthanahandfulofstationsinSanFranciscosEastBaywhere

developmentwasaggressivelysought,littlenewclusteringhasoccurredalongBARTssuburban

alignments.Indeed,moresuburbangrowthwasfreewayorientedthanrailwayoriented.

AmongthesuburbanareasthatpracticedTorontolikeproactiveplanning,notablythe

municipalitiesofWalnutCreekandPleasantHill,significantclusteringoccurred.Forthemostpart,substantialsubsidieswereneededtojumpstartdevelopment,suchasunderwritingof

landassemblagecostsandthetargetingofsupportiveinfrastructureimprovements(e.g.,new

sidewalksandbetterroadaccesstonearbyfreeways).InthecaseofPleasantHill,surveysof

residentslivingneartherailstationrevealthat45%ofemployedresidentsregularlytakeBART

toworkversusonly8%ofthosewholiveinthecitybutbeyondamilewalkshedofthe

station(Lundetal.,2006).Researchsuggeststhisridershipbonusislargelyaproductofself

selectionforlifestylereasons,peopleconscientiouslyresideneartransitinordertocommute

bytransit(Cervero,2007).OtherfactorsthathelpexplainPleasantHillssuccesswithtransit

orienteddevelopment(TOD)includeagoodstationareaplan(thatwasillustrativeandmarket

realistic)andthepresenceofapoliticalchampionwhoprovidedtheleadershipnecessarytoshepherddevelopmentproposalsthroughtheminefieldsoflocalpublichearingsand

environmentalreviews.

3.3 MetropolitanWashingtonandArlingtonCounty

MoregrowthhasoccurrednearmetropolitanWashingtonD.C.sheavyrailsysteminthe

pastquartercenturythananywhereintheUnitedStates.From1980to1990,40%ofthe


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regionsofficeandretailspacewasbuiltwithinwalkingdistanceofaMetrorailstation(Cervero

etal.,2004).Thefactthatthetimingoftherailwayinvestment(late1970sthrough1980s)

coincidedwitharapidperiodofgrowth(e.g.,morejobswereaddedtometropolitan

WashingtonthananywhereintheU.S.)helpedsteergrowthtorailservedcorridors.This,

combinedwithheightlimitrestrictionswithintheDistrictofColumbiaandfederalpolicythat

mandatesgovernmentofficestobelocatednearrailstations,furtherencouragedTOD.

Withoutquestion,therecipientofmostspillovergrowthfromWashingtonD.C.has

beenArlingtonCounty,Virginia,acrossthePotomacRiverfromthenationalcapital(Cerveroet

al.,2004).ArlingtonCountyisatextbookexampleofcreatingavision(thebullseyeconcept

plan,showninFigure4)andputtinginplaceappropriateimplementationtoolstoachievethe

vision.Throughacollaborativeeffortthatengagedlocalstakeholdersandanambitious

campaignthattargetedsupportiveinfrastructureimprovementstorailstopsalongthecorridor,

ArlingtonCountymanagedtotransformtheMetrorailOrangelineintoashowcaseoftransit

supportivedevelopment,withmidtohighrisetowersandmultipleusestodayflankingthe

Rosslyn,Courthouse,Clarendon,VirginiaSquare,andBallstonMetrorailstations.Since1970,

over15millionsquarefeetofofficespace,severalthousandhotelrooms,and18,000housing

unitshavebeenaddedtothesestationareas.Withthebullseyemethaphorinplacetoguide

ongoingplanning,ArlingtonCountyproceededtoleverageMetrorailspresenceandtransform

oncedormantneighborhoodsintovibrantclustersofoffice,retail,andresidential

development.

ThetransformationofonceruralArlingtonCountyintoashowcaseofcompact,mixed

useTODhasbeentheproductofambitious,laserfocusedstationareaplanningand

investment.PriortoMetrorailsarrival,ArlingtonCountyplannersunderstoodthathigh

performancetransitprovidedanunprecedentedopportunitytoshapefuturegrowthand

proceededtointroducevariousstrategiestargetedinfrastructureimprovements,incentivezoning,developmentproffers,permissiveandasofrightzoningtoenticeprivate

investmentsaroundstations.Afterpreparingcountywideandstationareaplansondesired

landuseoutcomes,densityandsetbackconfigurations,andcirculationsystems,zoning

classificationswerechangedanddevelopmentsthatcompliedwiththeseclassificationscould

proceedunencumbered.TheabilityofcomplyingdeveloperstocreateTODsasofrightwas

particularlyimportantforitmeantdeveloperscouldlineupcapital,secureloans,incurupfront

costs,andphaseinconstructionwithoutthefearoflocalgovernmentchangingitsmind.

ThepayoffofconcentratedgrowthalongrailcorridorsisrevealedinArlingtonCountys

transitridershipstatistics.TheCountytodayboastsoneofthehighestpercentagesoftransituseintheWashington,D.C.region,with39.3percentofMetrorailcorridorresidents

commutingtoworkbypublictransit.ThisistwicetheshareofCountyresidentswholive

outsideofMetrorailcorridors.Selfselectionisevidentinthataroundtwothirdsofemployed

residentsinseveralapartmentsandcondominiumprojectsnearRosslynandBallstonstations

taketransittowork.Animportantoutcomeofpromotingmixedusedevelopmentalongrail

corridorshasbeenbalancedjobsandhousinggrowthwhichinturnhasproducedbalanced

twowaytravelflows.CountsofstationentriesandexitsinArlingtonCountyarenearlyequal


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duringpeakhoursaswellastheoffpeak.Duringthemorningrushhours,manyofthecountys

Metrorailstationsarebothtriporiginsanddestinations,meaningtrainsandbusesarefullin

bothdirections.Thepresenceofsomuchretailentertainmenthotelactivitiesalongthe

Countysmetrorailcorridorshasfurtherfilledtrainsandbusesduringthemiddayandon

weekends.Balanced,mixedusedevelopmenthastranslatedintoascloseto24/7ridership

profileasanyU.S.settingoutsideofaCBD.

Arlington County

Figure4.ArlingtonCountysRosslynBallstonCorridor:FromBullsEyeConceptto

Implementation

3.4 ScandinavianExperiences:MetrosinCopenhagenandStockholm

Thebestexamplesoflongrangeplanningvisionsshapingrailinvestmentswhichin

turnedshapedurbangrowthcomefromtwoScandinaviansettings:Copenhagen,withits

celebratedFingerPlanandStockholm,intheformofitsPlanetaryClusterPlan.Inboth

cases,corridorsforchannelingoverspillgrowthfromtheurbancentersweredefinedearlyintheplanningprocess,andrailinfrastructurewasbuilt,ofteninadvanceofdemand,tosteer

growthalongdesiredgrowthaxes.Asimportantly,greenbeltwedgessetasideasagricultural

preserves,openspace,andnaturalhabitatswerealsodesignatedandaccordinglymajor

infrastructurewasdirectedawayfromthesedistricts.TheevolutionofCopenhagenfroma

FingerPlan,toadirectedrailinvestmentprogramalongdefinedgrowthaxes,tofingerlike

urbanizationpatternsisrevealedbyFigure5.


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Figure5.CopenhagensTransitFirstSpatialEvolution:FromFingerPlan,toFiveAxisRadial

Investment,toCorridorsofSatellite,RailServedNewTowns

InthecaseofStockholm,thelasthalfcenturyofstrategicregionalplanninghasgiven

risetoaregionalsettlementandcommutationpatternthathassubstantiallyloweredcardependencyinmiddleincomesuburbs.Stockholmsinvestmentinradialraillineshasgiven

risetoastringofpearlsurbanformwhereinabalanceduseoflandforworkandhousing.Yet

Stockholmhasrelativelyhighlevelofcarownership(555cars/1000inhabitants).Withtransit

orientedcorridors,onefindsmorejudiciousanddiscriminateuseoftheprivatecar.Most

Stockholmersusepublictransportforthedailygrindofgoingtowork,selectivelyusingcarsfor

shoppingandweekendexcursions.Stockholmplannershaveconsciouslycreatedjobshousing

balancealongrailservedaxialcorridors.Thisinturnhasproduceddirectionalflowbalances.

Duringpeakhours,55percentofcommutersaretypicallytravelinginonedirectionontrains

and45percentareheadingintheotherdirection.Stockholm'stransitmodalshareisnearly

twicethatfoundinbiggerrailservedEuropeancitieslikeBerlinandevenhigherthaninner

London'smarketshare.Perhapsmostimpressive,Stockholmisoneofthefewplaceswhere

automobilityappearstobereceding.Between1980and1990,itwastheonlycityinasample

of37globalcitiesthatregisteredapercapitadeclineincaruseadropoffof229annual

kilometersoftravelperperson(KenworthyandLaube,1999).

WhilethefirstgenerationofTODinmetropolitanStockholmwasonformergreenfields

(e.g.,VallingbyandKista),inrecenttimesapushhasbeenmadetopromoteGreenTODson

formerbrownfields.ThemostnotableexampleofthisisHammerbySjstad,aneco

communitythathastakenformalongarecentlybuiltinnerringtramway.HammerbySjstadis

amarriageofTODandgreenurbanism/greenarchitecture.Thecombinationofrailway

services,carsharing,andbikesharinghasdramaticallyreducedVKT/residentsandcorrespondinglygreenhousegasemissionsandenergyconsumption.Andthedesignofan

energyselfsufficientandlowwastecommunityhasshrunktheprojectsenvironmental

footprint.Today,residentsofHammerbySjstadproduce50%ofthepowertheyneedby

turningrecycledwastewateranddomesticwasteintoheating,cooling,andelectricity.


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4. ExperienceswithOtherRailwayInvestments

Whataffectshaverailwayinvestmentsotherthanheavyrail/metrosystemsnotably

lightrailtransit(LRT),tramways,commuterrailways,andhighspeedrail(HSR)hadonland

development?Lesssystematicresearchhasbeenconductedonthelanduseimpactsofthese

investments,althoughusefulpolicyinsightscanstillbegainedfromexperiencesrecordedtodate.

4.1 LightRailTransit

InthecaseofLRT,therehasgenerallybeenlesshighrise,clustereddevelopment

aroundstationsthanhasbeenthecasewithmetrosmainlybecausethesloweroperating

speeds(duetofactorslikemixedtrafficoperations,atgradeintersectioncrossings)whichhave

meantlesstimecompetitivenesswiththeprivatecarandfewerregionalaccessibilitybenefits

(CerveroandSeskin,1995).ThefactthatmanyLRTsystemshaveservedalimitedsetof

corridorsvisvisthemoreregionalscopeofmanymetroserviceshavefurthersuppresseddevelopmentimpacts.Anotherlimitingfactorhasbeentheconscientiousdecisiontosite

investmentsinlowcostcorridorse.g.,freewaymedians,disusedorabandonedfreightrights

ofway(Cervero,1984).ThefocusoncostminimizationhasinturnedminimizedLRTs

developmentimpacts.Thereareexceptions,however,suchasMockingbirdStationatthe

suburbanDallasAreaRapidTransit(DART)lightrailstation.Locatedfourmilesnorthof

downtownDallas,MockingbirdStationisamixeduse,urbanchicvillagelinkeddirectlytoa

lightrailstation(afterwhichitisnamed)viaawelcomingpedestrianbridge.Theassemblageof

offices,shops,restaurants,andloftsnearthestationcostaround$145milliontobuild,a

substantialsumgiventhatsuchaproducthadabsolutelynotrackrecordincarfriendly

Texas.In2003,residentialrentsattheMockingbirdstationweregoingfor$1.60persquare

footpermonth;othercomparablenearbypropertiesnotservedbytransitweregetting$1.30,

or20%less.

OneofthebestexamplesofLRTtriggeringadowntownbuildingboomisJerseyCity,New

Jersey(Cerveroetal.,2004).The15mileHudsonBergenlightrailsystemhasservedto

channelgrowthalongJerseyCitysburgeoningwaterfront,interlacingseveraldozenrecently

builtmidandhighriseoffice,retail,andhoteltowers.Withinthe2.5squarekilometer

downtownJerseyCitydevelopmentdistrict,the22parcelsadjacenttothelightrailtrackscomprisethemajorityofthe11.8millionsquarefeetofcommercialspacebuiltdowntown

duringthe19982004periodandover40percentofhousingunitadditions(Figure6).And

withintwocityblocks(or750feet)oftheLRTtracks,allofJerseyCitysofficeandhoteladditionsandoverthreequartersofhousingunitshavecongregated.Muchofthisgrowthis

attributabletoofficeactivitiesspillingoverfromManhattanacrosstheHudsonRiver(including

the12millionsquarefeetofofficedevelopmentdisplacedatthelowertipofManhattanbythe

9/11tragedy).TheHudsonBergenlineservedasapowerfulmagnet,focusingthegrowththat

migratedfromManhattantotherailservedcorridor.


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Figure6.ShareofDevelopmentActivityNearLightRailLinein2.5SquareKilometer

DowntownJerseyCity,19982004

4.2 CommuterandHighSpeedRail

CommuterpassengerrailsystemsthatfunnelprofessionalclassworkerstoCBDsof

largemetropolitanareashavemimickedthelanduseimpactsofmetrosystems:asradial

systems,theyhavestrengtheneddowntowns,allowingmorejobsandretailactivitiesto

concentrateinurbancoresthanwouldotherwisebepossible(Cervero,1998).Howeverthey

havealsospurreddecentralization,enablingmorefringeareasubdivisionstobebuiltthan

wouldotherwisebepossible.StudiesshowthattheconstructionoftheGOTransitcommuterrailsysteminmetropolitanTorontoacceleratedsuburbanizationandexurbanization,

promptingoneobservertoequatetheregionssettlementpatternasViennasurroundedby

Phoenix(Pill,1990).

HighSpeedRail(HSR)areinapositiontohavestrongergrowthinducinginfluencesthan

metrorailsystemsbecausetheyaddsubstantiallyhigherincrementsofaccessibility,

particularlyalongruralcorridors.ButbecauseHSRlargelycompeteswithintercityairtravel,


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thekindsoflandusesthatcouldbeexpectedtocongregatearoundHSRstopsdiffersfrom

metropolitanrailsystems.SincerelativelyfewpeopleregularlycommutebyHSR,less

residentialclusteringisexpectedatHSRstations.Atterminuses,officesandcommercialuses

mightbeexpectedandatotherstationsthereisthepotentialfordiscretionarydestinations

thatattractpeopleperiodically,likeconventionhotels,largeretailcenters,andentertainment

complexes.

ThebestinsightsaboutthecityshapingimpactsofHSRcomefromJapansShinkansen

HSRsystem.TheTokaidoLinethatopenedfromTokyotoOsakain1964hadastrongerimpact

onemploymentthanresidentialgrowth,withmuchoftheofficeandcommercialconstruction

concentratingattheterminalstationsofthesetwoprimarycities(Sawada,1995).Restaurant

andhotelbusinesseshavealsoprosperedalongShinkkansencorridors,reflectingsocial

recreationaltraveltocitieswithShinkansenstations(NakamuraandUeda,1989).Sands(1992)

contendsthattheShinkansensgrowthrelatedimpactsarepartlyattributabletotheconscious

decisiontorouteHSRinareasexperiencingorexpectedtoexperiencegrowth,making

outcomesaselffulfillingprophesy.ThereissomeevidencethattheShinkansensystem

enlargedTokyoscommuteshed,madepossiblebythetrendtowardparttime,contingentlabor

(whereinworkersonlygototheheadofficeafewdaysperweek)(Sanuki,1994).

OutsidetheprimarycitiesofTokyoandOsaka,urbangrowthoccurredmostlywhere

substantialinvestmentwasmadeinsecondaryfeederraillinesthatconnecttotheHSRstation.

ThishasbeenthecaseattheShinYokohamastation,whichhaswitnessedthefastestridership

growthofanyShinkansenstationtodate.InvestmentinasubwayconnectiontotheShin

Yokohamastationplusancillaryinfrastructureimprovements(e.g.,sanitation)spurred

significantlanduseshiftstocorridorsthatfeedintotheHSRstation(Amanoetal.,1995).Some

observershavereferredtotheconcentrationofnewlanddevelopmentalongsecondaryfeeder

anddistributornetworksasExtendedTOD,effectivelyextendingthesptialreachofHSRandmetroinvestmentsbyovercomingwhathasbeencalledthelastmileproblem(i.e.,the

difficultyofreachingdestinationsbeyondamileofmanynonurbanrailstations(Warren,

1997).

5. PolicyLessonsSummaryonRailTransitandUrbanDevelopment

Globalexperienceswithrailinvestmentsimpartimportantlessonsabouttheirlikely

impactsonurbanform.WhilemostresearchandrecordedexperiencesaredrawnfromNorth

America,Europe,andelsewhereinthedevelopedworld,thelessonsarethoughttobegenericandcertainlyapplicabletorailwaysystemsinLatinAmerica.Theselessonslargelydrawfrom

theliteraturereviewsandcasesummariesofKnightandTrygg(1977),Kelley(1994),Huang

(1996),Cervero(1984,1998),andCerveroandSeskin(1996).

Urbanrailwaysredistributegrowthmorethanitcreatesgrowth.Railwaysinfluencethedistributionmorethantheamountofdevelopmentwithinaregion.Itchannelswhere


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alreadycommittedgrowthoccurs,oftenshiftingitfromoneradialcorridor(i.e.,higway

orientedone)toanotherradialcorridor(i.e.,arailservedone).Inbig,congestedurban

settings,thisredistributioncantranslateintoneteconomicandemploymentgrowth,

mainlyintheformofagglomerations(i.e.,tallerbuildings)andtheassociatedeconomic

benefitsmadepossiblebyrailwayinvestments.

Aprerequisitetosignificantlandusechangesisahealthyregionaleconomy.Ifrailways

aretohavemuchimpact,thereneedstobegrowthtochannel.Regardlesshowmuch

proactiveplanningoccursorpublicsectormoneyisspent,railwayswillexertnegligible

landuseimpactsinareaswithweakregionaleconomies.Themeagerlandusechanges

followingtheintroductionoflightrailservicesinU.S.RustBeltcitieslikePittsburghand

Buffaloarecasesinpoint.

Landuseimpactsaregreatestwhenrailwayinvestmentsoccurjustpriortoanupswinginregionalgrowth.Experiencesshowthatthetimingofrailwayinvestmentsmatteralot

intermsofwhethersignificantlanduseshiftsoccur.NotedurbansociologistHomer

Hoytobservedsome70yearsagothaturbanformislargelyaproductofthedominant

transportationtechnologyinplaceduringacitysprevailingperiodofgrowth(Cervero,

1998).Torontossubwayinvestmentinthelate1950sduringaperiodofrapid

immigrationtothecitywasfortuitoussincemanynewhousingprojectswerebuilt

withinwalkingdistanceofrailstations.Forothercities,likeLosAngeleswhichinvested

heavilyinsubway,LRT,commuterraillinesinthe1990s,muchoftheregionsurban

growthhadalreadytakenplace,therewererelativelysmallincrementsfornewgrowth

forrailwaystosteertheproverbialtoolittle,toolate.Formanyrapidlydeveloping

cities,includingthoseinLatinAmerica,investinginrailwaysduringgrowthspurtscan

translateintoappreciablelanduseimpacts.

Radialrailsystemscanstrengthendowntowncores.ExperiencesfromToronto,San

Francisco,Tokyo,andelsewhereshowthatradialrailsystemsleadtoincreased

employmentgrowthinurbancenterssincethesearetheplacesthatreceivethelargest

incrementalgainsinregionalaccessibility(Figure7).Whileregionalsharesofjobsand

retailingthataredowntownoftenstillfallinthewakeofnewrailinvestments,they

wouldhavefallenevenmorewereitnotforCBDfocusedrailwayservices.

Railwaysystemsgenerallyreinforceandoftenacceleratedecentralizationtrends.Byimprovingaccessibilitytodifferentpartsofaregion,extensiverailwaynetworks,like

theirhighwaycounterparts,generallyencouragesuburbanization,tosomedegree(Figure7).Whilegrowthmightbefunneledinaparticulardirectionasaresultofnew

transitservices,moreoftenthannotthisdirectionwillbeoutward.

Proactiveplanningisnecessaryifdecentralizedgrowthistotaketheformofsubcenters.Whetherdecentralizedgrowthtakesamulticenteredform(i.e.,TOD)rests

largelywiththedegreeofpubliccommitmenttostrategicstationareaplanning,carried

outonaregionalscale(Figure7).ExperiencesincitieslikeTorontoshowthatan


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aggressivestandtoleveragethebenefitsofrailservicescanleadtomoreconcentrated

formsofdecentralizedgrowth.Givenpublicresourcecommitments,railwayscannot

onlystrengthenthecore,butalsoinduceselectedsubcentering.Whilerailways

contriutetooutwardgrowth,theycanhelptomoreefficientlyorganizewhatever

developmentoccurswithintraditionalbuiltupareas.

Railwayscanspurcentralcityredevelopmentundertherightconditions.When

governmentagenciesarewillingtoabsorbsomeoftherisksinherentinredeveloping

depressedandeconomicallystagnantneighborhoods,railwayscanhelpattractprivate

capitalandbreathenewlifeintostrugglingareas.Theremustbeanunwaveringpublic

commitmenttounderwriteredevelopmentcostsandprovideneededfinancial

investments.Thequidproquoisthatsharinginupstreamriskscanmeanthepublic

sectoreventuallysharesinthedownstreamrewardsofurbanrenewal.Experiences

suggestthatevenwithsuchinvestments,itisanuphillstruggletoturnaroundseveral

distressedurbandistricts,regardlessofarailwayspresence.Insuchsettings,theissue

islessoneoftransportationaccessandoftenmoreoneofcrime,intergenerational

poverty,andprivatedisinvestment.

Otherprodevelopmentmeasuresmustaccompanyrailwayinvestments.Inadditiontofinancialincentives,othersoftwarepoliciesareneededtomakerailwayhardware

attractivetolanddevelopers.Foremostamongtheseare:permissiveandincentive

zoning,suchasdensitybonuses;theavailabilityofnearbyvacantoreasytoassemble

anddevelopableparcels;supportforlandusechangesamonglocalresidents(i.e.,the

absenceoforganizedoppositionandnotinmybackyard,orNIMBY,forces);a

hospitablephysicalsetting(intermsofaesthetics,easeofpedestriancirculation,anda

healthyneighborhoodimage);complementarypublicimprovements(suchasupgrading

ofsidewalks,expansionofwaterandsanitationtrunklinecapacities,andburyingutilities);andanabsenceofphysicalconstraints(e.g.,preemptionoflanddevelopment

byparkandridelotsorthesitingofastationinabusyfreewaymedian).

Transitserviceincentivesandautomobiledisincentives(equalizers)helpininducingstationarealandusechanges.Provisionoffrequentandreliablerailandfeederbus

connectionsisofcourseneededifprivatecapitalistobeenticedtostationareassince

onlythenwillrailwaysbecometimecompetitivewiththeprivatecar.Suchprotransit

measuresoftenneedtobeaccompaniedbyequalizerpoliciesthatremovemanyof

thebuiltinincentivestodrive,suchastheavailabilityofplentiful,lowcostparking.

CongestionpricinginSingapore,Stockholm,andLondonpartlyexplainwhyrailwayservicesinthesecitiesaresoheavilypatronizedandnotunrelatedly,whynewland

developmentisoccurringaroundthesecitiesrailstations.

Networkeffectsmatter.Forfixedguidewayrailwaysystemstoinducelargescalelandusechanges,itisessentialthattheymimicthegeographiccoverageandregional

accessibilityoftheirchiefcompetitors,limitedaccessfreewaysandhighways.The

strongcityshapinginfluencesofmetrosinParis,London,andTokyooweinlargepartto


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suchnetworkeffectswhereinrailwaysservecomparablesharesoforigindestination

combinationsasfreewayandmotorwaynetworks.Theadditionofanewexclusive

guidewaylinecreatesspilloversandsynergies,benefitingnotonlythenewlyserved

corridorsbutexistingonesaswell.Forexistingmetrolines,newlyopenedlinesincrease

thenumberofregionalorigindestinationcombinationsthatcanbeserved.The

absenceofmajorlanduseimpactsfollowingtheopeningofLRTservicesintheU.S.arepartlyduetotheabsenceofsuchnetworkeffectssinglelineLRTservices,suchasthe

HiawathaserviceinMinneapolis,serveafractionofregionalorigindestination

combinationsthatareservedbythecitysfullydevelopedfreewaynetwork.

Figure7.LikelyLandUseOutcomesWhenUrbanRailInvestmentsareProactivelyLeveraged


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6.RailwaysandUrbanizationinLatinAmerica

Lessisknownaboutthecityshapingimpactsofrailwaysinthedevelopingworldin

generalandLatinAmericaspecifically,inlargepartbecausetherehavebeenfewsystematic

studiesonlanduseimpactstodate.Still,experiencesshowthatmetrosinSantiago,Chile,

Caracas,MexicoCity,andSoPaulo,Brazil,liketheirNorthAmericanandEuropeancounterparts,havelargelyencouragedregionaldecentralization(InstitutionofCivilEngineers,

1990).Unlikeinthedevelopedworld,however,thereappearstobelessagglomeration

impactsincoreareasfollowingtheopeningofmetrosystems,althoughwithoutrailway

investments,theprimacyroleofcoreareaswouldhavebeenweakenedmorebyroadway

constructionandrapidmotorization.

InthecaseofSantiago,Figuero(1990)foundthatthemetrorelocatedpoortothe

metropolitanperipherywhilemodernizingtheinnercity.Thispatternofsettlement,withthe

affluentlocatednearestthecitycentertheleastaffluentattheperiphery,typifiesmostLatin

Americancities.Similarly,byfocusingonthecentralcoreandservingcloserinneighborhoods,Caracassmetrohascateredmoretoaffluentpopulationgroupsandlesstothepoor(Sperling,

1981).Caracasmetrosbiggestdevelopmentimpacthasbeentospawnurbanrenewalinthe

citysmainvalley(Tobia,1989).Upzoningaroundcorestationsbylocalplanningofficialshelped

spurdensification.From1983to1989,morethan70%ofallnonresidentialbuildings

constructedwerewithintheareaofinfluenceofCaracasMetrosline1.Additionally,two

pedestrianmallswerebuiltovertheundergroundsectionofline1andaretailplazawasbuilt

undertheelevatedsectionofline2.Plazasandopenspaceshavealsobedesignedaround

variousmetrostations,incorporatingtheworksofselectedVenezuelanartists.

InLatinAmericaandelsewhereinthedevelopingworld,metroinvestmentshavelikely

contributedtosocialstratificationandinformalizationofhousing(Cervero,2001).Forthis

reasonmetroshavebeencriticizedforfailingtoalleviatepovertyandspecificallyforbeing

regressive,usingscarcegovernmentfinancialresourcesforpurposesthatbenefittherichfar

morethanthepoor.Metroslikelyallowformallanddevelopmenttodisplacethepoorto

informalsettlementsontheperiphery(e.g.,barriosandfavelas).Researchshowsthatthose

workerslivingininformalhousingonthefringesspendasmuchasonequarterofdailyearnings

ontransportation,oftenintheformofpayingmultipleinformaltransitoperatorsforaccessto

thecentralcity(CerveroandGolub,2007).Awelfareanalysisofinformalvansandsuburban

railwaysservingthelowincomeneighborhoodofBaixadaFluminenseinRiodeJaneirofound

thatgivingprioritytoformalbusandrailwayserviceswouldyieldnetbenefitstothepoorand

richalike(Golub,2003).Theinfluencesofinformalsectoractivitiesarefeltnotonlyinthefringesoflarge,railservedLatinAmericancities,however.Theabsenceofofficeandhighend

commercialdevelopmentnearcentralmetrostationsinMexicoCityhasbeenassociatedwith

thenuisanceeffectsofinformalvendors,streetpeddlers,andvariousformsofillicitcommercial

activities(Cervero,2001).Thelanddevelopmentimpacts,andnotunrelatedly,theincome

redistributioneffectsofmetroinvestments,hasgainedincreasedpolicyattentioninrecent

years.Mostinternationalaidorganizationsanddevelopmentbankstodayconsider

contributionstopovertyalleviationasoneofmanyfactorsthatweighinthedecisiontoprovide


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loansforcapitalintensiverailwayinvestments.

7. LandValueImpactsandValueCaptureOpportunities

Thedegreetowhichrailtransitinvestmentsyieldbenefitsisperhapsbestgaugedbytheimpactsonrealestatesalespricessurroundingrailstations.Theaccessibilitybenefits

conferredbypublicinfrastructureinvestmentsinrailwaysgetcapitalizedintohighervaluesfor

landparcelsimmediatelysurroundingstations.Itisimportanttonote,however,thatunlessa

railinvestmentcausesanetinflowofprivatecapitalandinvestmentintoaregion(that

otherwisewouldnothaveoccurredwithouttherailinvestment),thenthelandvalueimpacts

arelargelypecuniaryandredistributive.(Somebenefitsmightaccruefromtheagglomeration

economiesofrailpermittedhighrisedevelopment,althoughthesearegenerallysmallrelative

tonetgenerativeimpacts;seeCambridgeSystematics,etal.,1998).However,tothedegree

thatarailinvestmentsignificantlyreducestrafficcongestionandconferstraveltimesavingsto

workersandbusinesses,nearrailsystemsyieldrealeconomicbenefitsintheformofincreasedeconomicproductivity.Thisisthoughttorepresentthesituationofmanyrapidlyindustrializing

economiesoftheworld,includingthoseinLatinAmerica.

Asignificantbodyofresearchdocumentsthelandvaluecapitalizationbenefitsof

railwayinvestmentsacrosstheworld(Huang,1996;CambridgeSystematics,etal.,1998;

Dunphyetal.,2004).Significantgainslandpricesoccurinlargepartbecausethereisafinite,

limitednumberofbenefittingpropertiesasaresultofarailwayimprovement.Forpremiums

toaccrue,itseemsimportantthattransitbeinaneighborhoodwithareasonablyhealthyreal

estatemarketandfreefromsignsofstagnationordistress(Dunphyetal.,2004).Experiences

showthatthegreatestincreasesinlandpricesoftenoccurbeforetheopeningofrailway

servicesaslandspeculatorsanticipatefuturepriceappreciation(Dammetal.,1980)andthat

capitalizationeffectsaregreatestinhighlycongested,lesscardominantsettings(Cervero,

1998).Landpricepremiumsalsotendtoincreaseduringperiodsofeconomicexpansion,for

morematureandextensiverailwaynetworks(thattherebyresultinrailwaysproviding

comparableaccessibilitybenefitstoautohighwaynetworks),andwhereproactive

governmentpoliciesandincentiveshelpleveragedevelopment(CerveroandDuncan,2002).

Undertherightconditions,localgovernmentsstandtocapturesomeofthevalueadded

producedbypublicinvestmentinrailtransit,eitherindirectlythroughincreasedpropertytax

proceedsordirectlythroughprogramslikebenefitassessment,bettermenttaxes,ornegotiated

jointdevelopmentinitiatives(suchasequitypartnershipsbetweendevelopersandlocalgovernments).Theconceptofvaluecaptureasameanstofundorrecoverthecostofpublic

infrastructuregainedinterestwhenthesecondgenerationofurbanrailwayinvestmentsinthe

U.S.e.g.,SanFranciscoBARTandWashingtonMetrorailwerebuilt,particularlyfollowing

the1978publicationofWindfallsforWipeouts:LandValueCaptureandCompensationby

HagmanandMisczynksi(Fogartyetal.,2008).Throughexaminingtheimpactsofpublic

investmentsonlandvalues,HagmanandMiscyznski(1978)arguedthatwindfallstoproperty

ownersproducedbypublicinfrastructureinvestmentsshouldbecapturedbycities(orother


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publicagencies)throughtaxesandfeestiedtolandvalues.

Tothedegreefairandequitableprogramscanbemounted,governmentshavealottogainin

sharinginsomeoftheprofitsintroducedbynewtransitfacilities.Inparticular,revenues

gainedthroughvaluecapturecangotowardleveragingTOD.Municipalitiesmustoftentake

theleadinattractingprivatecapitaltorailstationareasbysprucinguptheneighborhoodthroughimprovedlandscapingandurbandesign,byintroducingcomplementaryinfrastructure

improvements(likesidewalksandtheundergroundingofutilities),andinthecaseofriskier

settings,underwritingprivatesectorlandacquisitionscosts.Allofthistakesmoney,oftenlots

ofit.Thus,valuecapturestandsasapotentialsourceofrevenuenotonlytohelppayoffthe

debtontransitinvestmentsbutalsotopayforupfrontandancillaryneighborhood

improvementsthatcanhelpleverageTOD.

Valuecapturealsohasequityappeal.Why,thereasoninggoes,letahandfulof

fortunatelandowners,orworseyet,realestatespeculators,reapthewindfallscreatedby

publicinvestmentsintransit?Returningthevalueaddedtoretireconstructionbondscapture

canrelievecashstrappedlocalgovernmentsoffiscalburdenswhilealsoreducingland

speculationandcreatingamorecompact,transitorientedurbanform.Havingthetransit

entitycontrolthelandaroundstations,moreover,increasesthechancethatmajortrip

generatorsandtransitorientedlandusessuchasretailplazas,offices,andcivicusesoccupy

strategicallyimportantlandparcels,therebyincreasingridershipandfareboxreturns.

Athirdbenefitofvaluecaptureschemesistheycanmoderatelandspeculationaround

railtransitstations.Withunregulatedlandmarketsandhighdemandforprivatedevelopment

inhighlyaccessiblelocations,landspeculatorsarelikelytobidupthepriceofrealestatein

anticipationoffuturewindfalls.Frequentturnoveroflandownershipbetweenthetimearail

investmentisannouncedandservicesactuallybeginoperatingcanleadtoanoverheatedlocalrealestatemarket.Thiscannotonlyresultinartificiallyinflatedlandpricesthateventually

declinebutalsocancauseconsiderabledisplacements,particularlyoflowerincomehouseholds

andsmallbusinesses.Tothedegreethatthepublicsectorcoparticipatesinthelandvalue

increasesthatareproducedbypublicinvestmentsinrailways,themotivationtopurchaseland

purelyforspeculativepurposesofreapingwindfallprofitsistempered.

Valuecaptureisnotwithoutlimitations,asoutlinedbyPeterson(2008).One,urban

landmarketsarenotoriouslyvolatileandrecentgainsinpropertyvaluescouldreflectaland

assetbubble.Thusrecapturingoverheatedpropertyvaluescouldmeanfuturedeclinesin

revenuesfollowingasharpeconomicdownturn.Two,landsalesoftenlacktransparencyandaccountability,sometimesconductedoffbudgetthroughprivatenegotiationsandsometimesa

victimofgraftandcorruption.Incompletelandregistriesandtitlingrecordscanalso

complicateimplementation(CerveroandSusantono,1999).Lastly,governmentscanartificially

inflatelandpricesthroughrestrictivezoningasarevenueproducingploybutinsodoingdistort

localrealestatemarkets.


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7.1 ValueCaptureMechanisms

Landvalueincreasesinducedbyrailwayinvestmentsandoperationsyieldincomethat

accruetothepublicsectorusuallyintheformofhigherpropertytaxproceeds.Thisindirect

formofvaluecapture,however,cannotbecounteduponbyrailwaycompaniesandpublic

transitoperatorssincepropertytaxproceedsusuallygotomunicipalcoffersandthusarenotdedicatedforthepurposesofpayingoffcapitaldebtincurredinbuildingrailways.Indirect

propertytaxgainsarethusanimperfectandundependableformofrailtransitvaluecapture.

Moredependablearevaluecapturestrategiesthattargetrevenuegainstospecific

districtsorprojects.Thesegenerallyfallintofourcategories(Fogartyetal.,2008;Cerveroet

al.,1991):

SpecialAssessmentsandBettermentTaxes:Ataxassessedagainstparcelsthathavebeenidentifiedasreceivingdirectbenefitsfromrailwayinvestments;

TaxIncrementFinancing:Amechanismthatallowsthepublicsectortosetasidethegrowthinpropertytax(orsometimessalestax)incomeresultingfrom

railwayinvestmentsanddedicatetheincrementalincreaseinincomestohelp

payforthecapitalinvestmentandancillaryactivities(e.g.,streetscape

enhancements);

ImpactFees:Afeeassessedonnewdevelopmentorredevelopmentwithinadefineddistrictasameanstodefraythecostofexpandingandextendingtransit

servicestotheaffectedproperties;

JointDevelopment:Apublicprivatepartnership(PPP)todelivertransitorienteddevelopment(TOD),usuallyinvolvingdevelopmentontransitagencyowned

landorairspaceandinvolvingeitherrevenuesharingorcostsharing.

SpecialAssessmentsandBettermentTaxesaremoreoftenusedtofundsewer,water,

andsidewalkimprovementsthanrailwaysystems.IntheU.S.,benefitassessmentdistricts

wereformedtocofinanceancillaryimprovements(e.g.,undergroundingutilities,road

expansion,streetscapeandsidewalkenhancements)forthe8kmRedLinesubwayinLos

AngelesaswellasbusmallsinMinneapolis,Denver,andPortland,Oregon(Cerveroetal.,

2004).InLosAngeles,assessmentsleviedoncommercialpropertiesinbuiltuprailservedcorridorshavegeneratedsome$180milliontodate.Additionally,around20%ofthecapital

costsofbuildingPortland,Oregonsdowntownstreetcarwaspaidbyspecialassessments

(Fogartyetal.,2008).BettermenttaxeshavelongbeenusedinBogot,Colombia,generating

morethan$1billiontofinancestreetandbridgeimprovementsoverthe19972007periodand

aretodayunderconsiderationforfinancingBogotsplannedundergroundmetro.Ratherthan

estimateparcelbyparcelgainsinlandvalueduetoindividualinvestmentproject,Bogot

financesacitywidebundleofpublicworksprojectsthatarebroadlydifferentiatedbybenefit


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zoneandotherfactors.ThecityscelebratedTransMilenioBRTsystem,researchshows,have

producedlandvaluepremiums(RodriquezandTarga,2004;RodriquezandMojica,2008)thus

backersofthemetrorailsystemcontendthatbettermenttaxesofpropertiesindistrictsdirectly

servedbyrailstationswillbeafairandefficientmeanstogeneratefunds.Bettermenttaxes

arealsooneofseveralfundingoptionsbeingconsideredforfinancingtheexpansionofBuenos

Airesssubwaynetwork.Assumingagoodlandregistryandpropertytaxadministrativesystemisinplace,assessmentfinancingandbettermenttaxeshasconsiderablepotentialforhelpingto

defraythecapitalcostsofrailwayinvestmentsinthedevelopingworld,includingLatinAmerica.

TaxIncrementFinancingdiffersfromassessmentfinancinginthatitfunnelsincremental

increasesinpropertytaxrevenuesbackintoadistricttohelprevitalizedistressed

neighborhoods.Taxincrementfinancing(TIF)hasbeenusedextensivelytoencourageTODin

manypartsoftheUnitedStates,includingthecityofChicagowherehalfofthe129TIFdistricts

containrailwaystations.ThestateofPennsylvaniaappliesTIFinTransitRevitalization

InvestmentDistricts(TRIDs)topromoteeconomicdevelopmentandTOD.AcriticismofTIFisit

divertstaxdollarsthatwouldotherwiseaccruetoacitysgeneraltreasuryandasthuscreatesa

privileged(i.e.,subsidized)zone.SuchequityconcernshavelimitedtheapplicationofTIFsto

muchofthedevelopingworld.

ImpactFeesareachargeassessedonnewdevelopmentasameanstodefraythecostof

expandingandextendedpublicservices.Whereasspecialassessmentandbetterment

financingisappliedtoallpropertieswithinaneffecteddistrict,impactfeesarenormallypassed

ononlytonewcomers.In1981,thecityofSanFrancisco,CaliforniaintroducedaTransitImpact

DevelopmentFee(TIDF)leviedagainstnewdowntownofficebuildingstoproduceincomefor

operatingandmaintainingthecitysMUNItransitnetwork,comprisinglightrail,dieselbus,

trolleybus,andcablecarservices.TIDFrevenuesproducearound$10millionannually,used

onlyforoperationsvisviscapitalexpansion.BrowardCounty,FloridahasaTransitOrientedConcurrencysystemthatsimilarlygeneratesincomefortransitoperationsbylevyingafixedfee

onnewdevelopment.Thisprogramcoversaround30%ofannualbustransitoperatingand

capitalcostsforthecounty(Fogartyetal.,2008).Becauselimitingimpactfeestonew

developmentonlycandeterinvestmentsinallbutthehealthiestrealestatemarketsandcan

inflatethecostofhousing,ithasbeenappliedonalimitedbasisoutsideoftheUnitedStates.

Inthedevelopingworld,exactionsaremorecommonwhereindeveloperscoverthecostof

expandinginfrastructure(e.g.,waterandsewertrunklinecapacities)toserveaspecificmaster

plannedsite.Privatecontributionstiedtolandbasedassessmentshaverecentlybeenusedto

buildandexpandconnectingroadsandbridgestomasterplanneddevelopmentsinCairo,

Egypt,MumbaiandBangalore,India,CapeTown,SouthAfrica,andIstanbul,Turkey(Peterson,2008).

Jointdevelopmentisarguablytheformofvaluecapturemostapplicabletorailtransit.

Underthisapproach,apublictransitagencypartnerswithaprivatedevelopertobuildareal

estateprojectonlandorairrightsownedbythetransitagencyitself.Inreturn,thetransit

agencyreceiveseitherrevenue(i.e.,revenuesharing)orpassesonpartorallofthecostsofrail

stationandancillaryconstruction(i.e.,costsharing).Unlikeotherformsofvaluecapture,


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however,jointdevelopmentisavoluntaryarrangementbetweenpublicandprivateinterests

seekingwinwinoutcomes(Cerveroetal.,1991).Amongthemostcommonformsof

revenuesharingschemesarelandleases,airrightsdevelopment,andstationinterfaceor

connectionfeeprograms.Costsharingschemesincludesharingconstructionexpenses,

incentivebasedprogramsthatproducebenefitsforprivatefinancing(e.g.,densitybonuses),

andjointuseofequipmentlikeventilationsystems.Asavaluecapturetoolfortransit,jointdevelopmenthasthemostappealinsettingswhereasignificantamountoflandisavailableto

atransitagency,preferablypurchasedontheopenmarketatafairlylowcost(whichusually

meanspriortoformalannouncementofanewrailwayproject).Tothedegreejoint

developmentislimitedtoageographicallyrestrictedarea,suchasoneortwosmallparcels

ownedbyatransitagency,itfailstocapturevaluefromabroaderareabenefitingfromnew

transitservices.

7.2 TransitJointDevelopmentasValueCapture

Becausejointdevelopmentiscontrolledbyatransitagency,itistheformofvaluethat

hasthegreatestpotentialtofinancingrailinvestmentsinmuchoftheworld.Itrequires,

however,aninstitutionalcapacitytoexpandbeyondthetraditionalmissionoftransitagencies

i.e.,buildingandoperatingtransitservicesandtoventureintootherentrepreneurial

realms,likevaluecapture.Thusinstitutionalreformsareoftenanecessarypartofany

successfultransitvaluecapturescheme.

TheimportanceofbeingentrepreneurialisunderscoredbyexperiencesinWashington,

D.C.Overthepasttwodecades,theWashingtonMetropolitanTransportationAuthority

(WMATA)whichdesigned,built,andtodayoperatestheregionsrailtransitandpublicbus

serviceshasaggressivelysoughttorecapturevaluethroughjointdevelopmentactivities.

WashingtonMetrorailsjointdevelopmentprogramofairrightsleasesandstationconnectionfeesgeneratearound2%ofthesystemsannualrevenueshoweverresearchshowsthe

increasedridershipandthusfareboxintakeatleastdoublesthispercentage(Cerveroetal.,

2004).ProactivismaccountsformuchofWMATAsjointdevelopmentsuccess.WMATAisan

independentregionaltransportationauthoritythatoverseesrailandbusoperationsinafairly

complexinstitutionalsetting:theDistrictofColumbiaandtwostates,VirginiaandMaryland,a

regionwithover6millioninhabitants.AvitalstepinWMATApursuingvaluecapturewasthe

creationofarealestatedevelopmentdepartmentwithintheagencyattheverybeginning,

priortotheconstructionandopeningofrailwayservices.Byhiringseasonedrealestate

professionalstostaffandmanagethisdepartment,WMATAwaswellpositionedtoseekout

remunerativejointdevelopmentpossibilities.Privatesectorexperienceshelpedtocreatea

moreentrepreneurialapproachtolanddevelopmentthanisfoundinmosttransitagencies.

Importantlystaffmembersweregiventhefinancialresourcestopurchasedlandaround

plannedrailstationsontheopenmarket,oftenbeforeformalplanswereannouncedandthus

atfairlyreasonableprices.Ratherthanwaitingandreactingtodeveloperproposals,WMATAs

realestateofficeactivelysoughtoutmutuallyadvantageousjointdevelopmentopportunities.


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Withfinancialandinstitutionalsupportprovidedbyboardmembers,WMATAsrealestate

officehasovertimeamassedanimpressiveportfoliooflandholdings,muchofitpurchasedon

theopenmarketplaceandsomecomprisingformerfarmsteadsthatwerepurchaseda

favorableprices.Todate,WMATAhadundertakenmorethanthirtydevelopmentprojectsata

valueofmorethan$2billiononlandtheagencyowns.

Overtime,WMATAhasrefineditsjointdevelopmentactivities.Today,candidate

stationareasitesarecarefullyscreenedaccordingtoasetofcriteriathatgaugedevelopment

potential.Forsitesselected,aRequestforProposals(RfP)isissuedtosolicitdeveloper

interests.Throughnegotiations,adeveloperteamischosenandcontractsareenteredinto

specifythefinancialtermsofthedeal.Withthehelpofaprivaterealestatefirm,WMATAnow

ratespotentialsitesaccordingtothelikelydegreeofprivatesectorinterestsanddevelopment

constraints.WMATAownedlandandairrightsgetreleasedtothedevelopmentmarketnot

unlikeifitwereinthehandsofaprivatesectorconsortium.

7.3 GuidanceonValueCaptureandJointDevelopmentintheDevelopingWorld

Jointdevelopmentinitiativeswherepublicandprivateinterestsvoluntarilyenterinto

agreementsarelikelythebestformoftransitvaluecaptureinrapidlygrowingcitiesofthe

developingworld.Presumably,bothpartieswhowillinglyenterintodealsperceivebenefits

fromcodevelopingneartransitstations,thustransitsvalueaddedintheseinstancesis

indisputable.

Successstoriesandmodeldemonstrationsareeffectivetoolsforadvancingand

proliferatingtransitjointdevelopment.Internationalaidagenciesandlendinginstitutionscan

seedsuchactivitiesbytyingloansandaidfornewrailwayinvestmentstojointdevelopment

requirements,providingtestbedsforothertransitoperatorstoemulate.

Steponeinpromptingacityorrailwayagencytoaggressivelypursuetransitjoint

developmentisinstitutionalreforms.Notably,aswasthecasewithWMATAinWashington,

D.C.,arailwayentityeligibleforexternalloansandfundingsupportshouldberequiredto

createarealestatedevelopmentdivisionwithintheorganization.Thisismostlikelytooccur

whereasingletransitauthorityexists,aswasthecasewithWMATA.Therealestate

developmentdepartmentshouldbestaffedwithindividualswithprivatesectorexperienceto

createamoreentrepreneurialapproachtolanddevelopment.Creatingatownplanningand

urbandesigndepartmenttoensurejointdevelopmentprojectsareofahighqualityand

pedestrianfriendly,andarearchitecturallyintegrated,canbeanotherkeyinstitutionalreform,asdiscussedlaterwiththecaseofHongKong.

Witharealestatedevelopmentteaminplace,financialresourcesthenneedtobe

providedfortheagencytopurchaseandamasslandparcelsaroundplannedrailstops.Ideally

thisisdoneearlyintheprocesswhenlandvaluesarefairlylow,suchasattheterminusesof

plannedlinesthatextendtoexistingagriculturalland.Onceaportfolioofrealestateexists,a

reputablerealestateconsultingfirmshouldbehiredtoscanandassessthedevelopment


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potentialofagencyownedland,usingcostproformasandothertriedandtrueassessment

tools.Afterparcelsandairrightsarerankedandassessedaccordingtotheirdevelopment

potential,thetransitagencyshouldthenissueRfPstosolicitprivatedeveloperinterest.Itis

importantthatotherstakeholdersnotablyplannersanddecisionmakersoftheaffected

municipaljurisdictionareinvolvedintheprocesstoensuresupportivezoningandlanduse

regulationsareinplaceandthatanyjointdevelopmentschemecontributestolargercommunitygoals,suchascreatingpedestrianfriendlyTODs.

Oncedevelopmentpartnersandjointdevelopmentschemesareselectedforhigh

prioritysites,thetransitagencyneedstomonitorprojectconstructionanddevelopment

outcomestoensurecompliancewiththetermsofadeveloperagreement.Overtime,

adjustmentsneedtobemadetoensurejointdevelopmentschemesapportionrevenuesand

expensesfairlyamongpartnersandallowforsteady,dependablerevenuestreams.Itmight

alsobepossibletoonedayreplaceRFPsforindividualsiteswithamasterdevelopment

agreementwhereinadevelopmentteamhasaccesstomultipledevelopmentsitesalonga

railwaycorridor.ThisprovidesgreaterflexibilityinphasinginTODsaccordingtoshiftsin

businesscyclesandrealestatemarketconditions.SeveralU.S.cities,notablyDallas,Texas,

Raleigh,NorthCarolina,andDenver,Colorado,arecurrentlyexploringsuchmaster

developmentagreementoptionsaspartofplannedrailtransitextensions.

Whileexperienceswithtransitjointdevelopmentarelargelylimitedtothedeveloped

world,theseriesofstepsandguidelinesoutlinedaboveareapplicableinanysetting,including

LatinAmerica.Theprinciplesofvaluecaptureandjointdevelopmentarepureandwidely

embracedbylandeconomistsbasedonasolidtheoreticalfoundation.Actingonthese

principlesrequiresbothapoliticalwillandinstitutionalcapacity.Internationalaidagenciesand

lendinginstitutionsarelikelythebestagentstoprodlocalgovernmentstoputinplacerail

transitagenciesthatcancarryoutthepracticesofWMATAandotherentrepreneurialentities.

8. ValueCapture:ExperiencesinTokyoandHongKong

Themostnotablecontemporaryexamplesofprivaterailwayconstructionofthe

majorityofurbanraillines,notjustextensions(ashasbeenthecaseinLatinAmerica),come

fromtwoofeastAsiaseconomicjuggernauts:HongKongandTokyo.Incontrasttothe

experiencesofWMATAandotheragenciesinrecapturingvaluethroughjointdevelopment,

specialassessments,andotherschemes,inbothofthesecitiestherailwayagencypracticed

landdevelopmentitself.Whatdistinguishesbothcasesisprivaterailwaycompaniesrelianceonpropertydevelopmenttodirectlygenerateprofits(visvisindirectlyrecapturingvalue

throughdealswithprivatelanddevelopers).InHongKong,aprivatecorporationhasassumed

theroleofbuildingthecitysmodernurbanrailsystems,relyingmainlyonreturnsfrom

ancillarylanddevelopmenttocoverconstructionanddevelopmentcosts.MetropolitanTokyo

hasanevenlongerhistoryofprivaterailwayconstruction.Overthepasthalfcentury,private

railwaycorporationshaveconstructednewtownsaroundrailwaystationsthroughoutthe

suburbsofTokyo,exploitingthelandvaluegainsinandaroundrailwaystationsconferredby


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improvedaccessibility.

8.1 TokyosPrivateRailways

Tokyosrailwaynetworkownedandoperatedbyamixofpublic,privateandquasi

privateentitiesis,byfar,theworldslargest.Mostoftheregionsextensivenetworkofsuburbanrailwaylineswasbuiltbyprivatecompanieswhoreceivedgovernmentconcessions

andexclusiverightstodesign,build,andoperaterailservices.Tokyosrailwaycompanieshave

historicallyleveragedrealestatedevelopmenttobothpayforinfrastructureandproduce

profitsforshareholders.Andtheyhavesimilarlyopenedconveniencestoresandshopping

mallswithinandadjacenttostations.

WhatmostdistinguishesTokyosrailwaycompanies,however,istheirconstructionof

notjustahandfulofbuildingsbutalsoveritablenewtownsononcevirginlands(Cervero,

1998).WestofcentralTokyo,wheremanyoftheregionsmostupmarketsuburbsarelocated,

entirecommunitiesaretodaythedomainsofpowerfulconglomeratesthatarebestknownfor

theirdepartmentstorechainsTokyu,Odakyu,Keio,andSeibubutwhichfirstandforemost

areinthebusinessofrailwayandrealestatedevelopment.Allstartedasprivaterailway

companiesandovertimebranchedintobusinessescloselyrelatedtotherailwayindustry,

includingrealestate,retailing,busoperations,andelectricpowergeneration.Suchbusiness

expansionmadeperfectlygoodeconomicsense.Placingshoppingmalls,apartments,and

entertainmentcomplexesnearstationsgeneratedrailtraffic;inturn,railwaysbrought

customerstotheseestablishments.Duringthe1980sattheheightofrailway/newtownco

developmentandasurgeinJapaneserealestateprices,railwaycompanieswereearning

investmentreturnsonancillaryrealestateprojectsintherangeof50%to70%,withprofit

marginsfromrealestatefaroutstrippingthosefromtransitservices(Figure8).

The1990sandonwardshavemarkedaneweraforTokyosprivaterailwaycompanies.

Forone,theburstofJapansrealestatepricebubblesawthemarketvaluationsofrail

companieslandholdingsfall.Additionally,powerfuldemographictrendslikedecliningbirth

ratesandanagingpopulation,combinedwithaslowingoftheeconomy,reducedthedemand

fornewtownconstruction.Tospreadtherisksofashakierrealestatemarket,privaterailway

companieshaveinrecentyearspartneredwiththirdpartiestopursuelargescaledevelopment

projects.Theredevelopmentandinfillingofstrategiccentralcitylandparcelsisalsobeing

pursuedbyTokyostwoformerpublicrailways,JREastandTokyoMetro.JREastsshowcase

realestateprojectisTokyoStationCity,jointlydevelopedbytherailwaycompanyandprivate

interests.TokyoStationCityfeatureshighrise,classAofficebuildings,retailcenters,andhotels.Tokyostationiswellsuitedforlargescaleredevelopmentowingtolargeamountsof

buildablespaceabovedepotsaswellashighpedestriantrafficvolumes.Onatypicalweekday

in2005,aroundahalfmillionpassengerspassedthroughTokyostationeachday.


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Figure8.RatesofReturnbyPrivateRailwayCorporationsinMetropolitanTokyo,19801996.Source:Cervero(1998)

8.2 HongKong:ValueCaptureandPlaceMaking

HongKongisoneofthefewplacesintheworldwherepublictransportmakesaprofit,

courtesyofthecitysrailoperatorMTRCpursuingwhatiscalledtheRail+Property

program,orR+Pforshort(CerveroandMurakami,2008).R+Pisoneofthebestexamples

anywhereoftransitvaluecaptureinaction.Giventhehighpremiumplacedonaccesstofast,

efficientandreliablepublictransportservicesinadense,congestedcitylikeHongKong,the

priceoflandnearrailwaystationsisgenerallyhigherthanelsewhere,sometimesbyseveral

ordersofmagnitude.MTRChasuseditsabilitytopurchasethedevelopmentrightsforland

aroundstationstorecoupthecostofinvestinginrailtransitandturnaprofit.Therailwayhas

alsoplayedavitalcityshapingrole.In2002,around2.8millionpeople,or41%ofHongKongs

population,livedwithin500mofarailwaystation(Tangetal.,2004).

ProfitmotiveaccountsforMTRCsactiveinvolvementinlanddevelopment.AsaprivatecorporationthatsellssharesontheHongKongstockmarket,MTRCoperatesoncommercial

principles,financingandoperatingrailwayservicesthatareselfsupportingandyieldanet

returnoninvestment.Effectively,thefullyloadedcostsofpublictransportinvestments,

operations,andmaintenancearecoveredbysupplementingfareandotherrevenueswith

incomefromancillaryrealestatedevelopmente.g.,thesaleofdevelopmentrights,joint

venturingwithprivaterealestatedevelopers,andrunningretailoutletsinandaroundsubway


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stations.HongKongsgovernmentisMTRCsmajoritystockholder,ensuringthecompany

weighsthebroaderpublicinterestinitsdaytodaydecisions.However,thesaleof23%of

MTRCssharestoprivateinvestorsexertsamarketdiscipline,promptingthecompanytobe

entrepreneurial.Duringthe20012005period,propertydevelopmentproduced52percentof

MTRCsrevenues.Bycontrast,railwayincome,madeupmostlyoffareboxreceipts,generated

28percentoftotalincome.MTRCsinvolvementinallpropertyrelatedactivitiesi.e.,development,investment,andmanagementproduced62percentoftotalincome,morethan

twiceasmuchasuserfares.AnexampleofanMTRCR+Pprojectthathasyieldedbothhigh

ratesoffinancialreturnsandhighridership(andthusfareboxincome)isMaritimeSquareat

theTsingYiStation(Figure9).

HongKonghaslonghadtalltowersperchedaboverailwaystations,howeverdensity

alonedoesnotmakeagoodTOD.Whatwasoftenmissingwasahighqualitypedestrian

environmentandasenseofplace.MostfirstgenerationR+Pprojectsfeatured

indistinguishableapartmenttowersthatfunneledpedestrianontobusystreetsandleftitto

theirowndevicestofindawaytoasubwayentrance.Growingdiscontentoversterilestation

areaenvironmentsandsaggingrealestatemarketperformanceofolderbuildingsprompted

MTRCtopaymoreattentiontoprinciplesofgoodtownplanning.In2000MTRCcreateda

townplanningdivisionwithinthecorporationtopursuelanddevelopmentstrategiesthatmet

corporatefinancialobjectiveswhilealsoenhancingstationareaenvironments.Priortothis,

R+Pprojectsfollowedratherthananticipateddevelopment.Withaninhousetownplanning

department,MTRCbecamemoreproactive.Thishastakentheformofthecompanybeing

aheadofmarketdemand,buildinghighquality,pedestrianfriendlyTODstosteergrowth.

Researchshowsthedesignofhighqualitywalkingenvironmentshasyieldedevenhigher

financialreturnspersquaremeterforR+Pprojects(CerveroandMurakami,2009).InHong

Kong,pedestrianfriendlyR+Pprojectshavecontributedtosustainableurbanismaswellas

sustainablefinance.Thesebenefitshavebeencapitalizedintolandprices.

9.Conclusion

Globalexperiencesshowthatundertherightconditions,railtransitinvestmentscan

producesignificantlandusechangesaroundrailtransitstations.Besidessuchexternal,or

exogenous,forcesasregionaleconomicgrowth,increasingmotorization,andworseningtraffic

congestion,internal,orendogenous,factorsalsoinfluenceoutcomes.Amongthepolicylevers

thatshapetheformandtypeofstationareadevelopmentthatgovernmentofficialshaveattheirdisposalare:permissiveandincentivebasedzoningaroundstations;cofinancing,suchas

thecreationofbenefitassessmentdistrictstogenerateincomefromlandappreciation;the

abilitytotargetsupportiveinfrastructureandpublicinvestmentsaroundstationareas;andthe

abilitytoassembleandpurchaselandtosupporttosupportplannedrealestateprojects.


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Figure9.HongKongMTRsMaritimeSquareResidentialRetailDevelopment.Situatedabove

theTsingYiStationbetweencentralHongKongandthenewinternationalairport,MaritimeSquarefeatureshierarchicallyintegrateduses.Shoppingmallextendsfromthegroundfloortothe3

rd

level.Stationconcoursesitsonthe1stfloor,withraillinesandplatformsaboveandancillary/logistical

functions(likepublictransport/businterchangeandparking)atorbelow.Abovethe4thand5

thfloor

residentialparkingliesapodiumgardenandabovethis,highrise,luxuryresidentialtowers.

Whilemarketforcespowerfullyshapelanduseoutcomes,experiencesfrom

ScandinaviancitieslikeCopenhagenandStockholmrevealthatacogentregionalvisionhelps

considerablyinensuringthatrailwayinvestmentsproducedesiredurbanformoutcomes.Experiencesfromtheseandothercitiessuggestthatstationareaplanningneedstobecarried

outselectivelyandjudiciously.Inmanysettings,andthiscertainlypertainstoLatinAmerica,

planningeffortsshouldbedevotedtodevelopingorredevelopingahandfulofrailstations,at

most.Thisallowsresourcestobeeffectivelyconcentratedandincreasestheoddsofawin

winarrangementwhereinbothpublicandprivateinterestscancoparticipateinthebenefits

conferredbynewrailinvestments.Demonstratingthatpositivelandusechangesarepossible


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inconjunctionwitharailinvestmentisimportantforproducinggoodmodelsthatthelarger

developmentcommunitycanemulateaswellasconvincingbanksandlendersthatinvestingin

stationareaprojectscanbefinanciallyremunerative.

Whethertransitorienteddevelopmentyieldsnetsocietalbenefitsisoftenrevealedby

landpriceimpacts.Accessibilitybenefitsconferredbyrailwayinvestmentsgetcapitalizedintolandvalues,presentingrailwayinvestorswithtremendousopportunitiestorecapturesomeof

thevaluecreatedbytheinvestment,atleastasasupplementtofareboxincomeandother

revenuesources.Asreviewedinthispaper,eastAsiancitieslikeTokyoandHongKonghave

beenparticularlymostaggressiveatrecapturingvaluethroughancillarylanddevelopmentin

andaroundrailstations.There,thelogicisvaluecaptureandjointdevelopmentnotonly

generateincometohelpretirerailcapitalinvestmentbondsandfinanceoperations,butthey

alsocreatemarketdemandthatensureshighridershipservices.HongKongsversionofpublic

privatepartnershipisnotaboutoffloadingthecostofbuildingrailwaystotheprivatesector.

Rather,itisaboutcodevelopmenteachsectorbringinganaturaladvantagetothetable

(e.g.,landacquisitionpowersinthecaseofthepublicsector;accesstoequitycapitalinthe

caseoftheprivatesector).Theresultingwinwinsituationnotonlyleadstofinanciallyviable

investments,butalsoanintimateconnectionbetweenrailsystemsandnearbyrealestate

developmentthatattractstenants,newinvestors,andtransitriders.

LatinAmericancitiesarewellpositionedtolearnfrominternationalexperienceswith

railinducedlandusechanges.Importantly,manyhavethekindsofprerequisitesneededif

railwayinvestmentsaretotriggermeaningfullandusechanges,includingrapidgrowth,rising

realincomes,increasedmotorizationandcongestionlevels,andthestrengtheningof

governmentscapacitytoenterintoconstructivejointdevelopmentdealswiththeprivate

sector.Indeed,LatinAmericahasbeenagloballeaderindrawinginprivatecapitaltohelp

financerailwayconstruction,generallywithgoodresults.InBuenosAiresandRiodeJaneiro,privatefinancingandconstructionofmetroextensionswereaccompaniedbyincreased

ridershipproductivityandlowerinvestmentcostswithoutanoticeabledeclineinservicequality

(Estacheetal.,1999;Zegras,2004).HoweverLatinAmericancitieshaveyettomoveinthe

directionofcitieslikeTokyoandHongKonginengagingprivateinvestorstocofinancecapital

investmentsthroughancillarylanddevelopment.Suchvaluecaptureinitiativescouldgoalong

waytowardputtingLatinAmericancitiesonmoresustainablepathwaysintermsofboth

facilityfinancingandfuturepatternsofurbandevelopment.


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