Transportation as a Business

In North America, the urban characteristics of each city are unique thanks to strong regional and municipal agencies that have shaped their history. Cities like Los Angeles, that have dismantled or never opted for dedicated public transportation infrastructure are now reestablishing light rail as an essential feature to the city-scape. In cities like New York, aging metro systems are struggling to modernize to handle record levels of ridership and are facing the daunting task of bringing connectivity to new neighborhoods. In Canada, a federal push to invest in public transportation has agencies aggressively developing capital plans to become the cities of the future.

However diverse the local, regional or federal politics, cities across the nation are asking the same question: how can we increase the service quality, expand our network to under-accessed neighborhoods, and invest in capital plans in an economically and fiscally sustainable manner?

A Changing Narrative

Following the 1990s, urban centers in North America began to emerge again as regional economic powerhouses, brought in new residents, real estate investments, and emerging industries. However, decades of decentralized development left many municipalities with infrastructure more suited for a lifestyle of sprawl, neighborhoods ill-suited to handle the pressures of economic development, and limited transportation options to access commercial centers and city services for residents.

Post-recession transit agencies have made a compelling narrative by describing the role they play in future economic growth. This has helped residents understand the overarching economic benefits of robust and well-maintained public transportation systems. In addition, increasing numbers of Americans travelling abroad have provided hard evidence of how impactful a well-run, well-funded public transportation system can be to a country’s economy. Now, agencies in North America will need to harness this newfound appreciation of public transportation to create new opportunities to modernize and expand their services.

Regions Making Economic Decisions

Some regions have turned towards capturing the economic value of their development. For both Los Angeles and Denver, the rapid expansion of their Light Rail systems in the past two decades has only solidified following successful local referendums, and the trend is continuing in other cities and regions.

In order to be competitive destinations for companies and talented professionals, both cities have aggressively developed their new transportation networks. From 1990-2013, 105 miles of light rail and 93 stations were created in Los Angeles to provide residents with alternatives to highly congested roads and highways. Denver, a similarly ambitious series of projects from 1994-present day has seen 42 miles of light rail with 53 stations to connect its neighborhoods to the city center.

In 2016, both transit agencies, with the support of political and advocacy groups were able to successfully win essential referendums for municipal funding to cover future capital projects. A key argument made to convince citizens of the necessity of raising funds in both cases was the argument that public transit drives future economic development and it significantly reduces congestion. As a testament of the success of the economic message for public transportation, both referendums would not have been successful without buy-in by residents who may not even ever consider using public transportation.

Such success is not ubiquitous though, as in the same year, a light rail expansion to Virginia Beach was defeated in the ballot because of a strong grassroots opposition of combined NIMBY and arguments that the system will not be fiscally sustainable or economically beneficial

According to the Center for Transportation Excellence, in the United States there were 77 measures on the ballot box to measures related to funding public transportation, with 55 won and 22 lost. At the upcoming International Rail Forum for North America, the Vice President of APTA - North America’s transportation industry group that was a significant contributor towards many of the referendums in the United States, will speak along with Roderick Diaz - the Director of Planning and Development, from Los Angeles Metrolink and other transportation professionals.

Commercial Development: Leveraging Today's Lifestyle Choices

While municipal funding is effective in capturing local economic development, some transit agencies are looking to alternative revenue sources to increase their profitability and to demonstrate their fiscal sustainability.

In New York City, the completion of the Fulton Street Transit Center, a station that has been multipurposed to serve as both a major transportation node and a commercial space, is a strong example of transportation agencies effectively developing new revenue sources within the constraints of a federally funded program. Limited geographically by the Lower Manhattan Recovery Grant, the New York City Metropolitan Transit Agency (MTA) identified its Fulton Street Station as a meeting point of various subway lines and chose to leverage its ownership of the real estate to turn it into a multi-floor commercial center with easier access between platforms. The MTA was only required to fund $147 million dollars of the $1.4 billion dollar complex to rebuild one of its busiest stations (300,000 daily) and adds 180,000 square feet of commercial space to generate revenue.

Transportation as a Business

UITP has recognized the necessity of transit agencies, especially in North America, to make concise and clear arguments about the benefits of public transit whilst also making transit systems economically sustainable. UITP’s International Rail Forum for North America will take place December 7th 2017 in Washington D.C., hosted by The Washington Metropolitan Area Transit Authority, and will focus on how transit systems can find new methods of revenue generation, increase public awareness and support for transit funding, and become an integral feature of regional economic development.

In the upcoming Forum, among other transit officials, the senior vice president of the New York MTA Capital Construction Company in charge of the development aspects of the East Side Access project at Grand Central Terminal - another MTA station that is by itself a cultural, economic and transportation center - will speak along with Derrick Cheung, the Vice President of Vancouver’s TransLink – an agency that has leased realty space for decades and is planning to expand commercial space. As a key feature to this Forum UITP, utilizing its worldwide membership, will bring to the Forum leading international Transit leaders from Hong Kong, Tokyo, London, Paris and Sao Paulo who will explain innovative models in their cities.

By bringing these high domestic and international speakers, UITP hopes to help bring together transportation agencies so they can share their experiences in managing the complexities of non-fare revenue generation, reaching out to communities and regions, and capturing the economic benefit they bring to be reinvested. Sharing this knowledge will be essential for these agencies to be able to navigate increasing urban populations, aging demographics, and aging infrastructure.

 

To join the conversation, register for the International Rail Forum for North America here!