Some time ago, I started a series called “M-1 Will Happen, Here’s Why″ – I continue it here with Part 3:

  • It does make tremendous economic sense: From an economic perspective LRT/Streetcar is all about economic development which can pay for the investment through value capture. I will set the stage: we are currently in the wake of the Great Recession, facing massive budget deficits, facing rapidly declining value of revenues that were never pegged to inflation and have not been raised in a decade (gas tax), and we are confronting massive long-term lifecycle costs we are just beginning to understand of previous 1950s infrastructure investments (highways). Therefore, we as a nation are now looking for public investments that not only have short term gains, but directly influence the creation of places of long-term lasting value, have sustainable lifecycle costs into the 2nd and 3rd lifecycle, are flexible and resilient against future risks, and can actually have a positive return on investment and be paid for using value capture. Cities are finally starting to understand how to capture value from transportation investments. That means changing zoning to maximize development opportunities, that means changing tax structures from property taxes to land taxes to encourage property improvements, that means allocating taxes that have a relationship to development such as real estate transaction taxes to a dedicated transit fund, because the presence of transit increases and strengthens the resiliency of real estate values. As we now know, the math for value capture does not work out for highways and low density suburban development, especially after the first life cycle of the infrastrcture investment is over. Suburban development which originates from highway investments does not support itself in the long-term through the lens of value capture, fixed route public transit investments in dense mixed use areas do when they are paired with smart development practices and policies as outlined above. Much more can be read on this subject on the Strong Towns site. Even in this post-recession environment, we now have data showing that transit oriented neighborhoods surrounding transit stations held and increased their value during the recession, while those without transit dropped. Read the stunning numbers here.


  • Private investment: The commitments from private entities such as Penske and Chrysler are massive especially for their commitment to cover early operating costs once constructed in that fragile time as developers are still creating the density necessary to support the rail operations. This is not something that most LRT/Streetcar projects enjoy on the same scale, if at all. With M-1 it is not the public sector pushing for the project, it is the private sector, and that sends a very positive signal to the federal government, who will help fund construction (not operations) and ultimately the primary body that has to approve it. It also is promising that the private sector is pushing it because private developers are the key to solidifying project’s relevancy to the economic development of the city, and it is impressive to have them on board from the beginning.


up next: Part 4: M-1 Will Happen, Here’s Why