In this month's Atlantic, Chris Leinberger suggests that private developers should fund the development of street car lines because of the higher values that proximity to transit brings.
Over at the Next American City, Yonah Freemark has some pretty scathing criticism of Leinberger's enthusiasm. He writes that "Leinberger’s solution — that developers could benefit by spending their own money to build transit — is problematic. For one, it fails to account for the fact that most land speculators move on to new work once they’ve sold off their projects to home buyers. Who would continue to subsidize the operations costs of the new transit systems once the land has been sold? Is it fair to expect municipal transit operators to take over the servicing of privately developed systems? Second, Leinberger’s argument assumes that developers would be either wealthy enough or powerful enough to assemble the necessary right-of-way for said transit and then build it. Noting Detroit’s recent public-private streetcar deal, he posits that the federal government should be more willing to fund private-initiated public transportation, and it’s true that involvement from Washington would make such investments far more feasible."
Yonah's criticisms are pretty spot on, but they miss even bigger problems that would actually squash any of Leinberger's lovely dreams. When you actually look at the costs of building a light rail line, and you look at the scope of profits, and even the marginal growth in value induced by TOD, you still don't cover the costs of building a light rail line.
Even more importantly? The lead time to build a light rail line is HUGE, and long, probably much longer than the time a developer wants to spend building. Developers want no more than five years of pre-development commitment. Assuming that the costs justified the TOD, which I doubt, the amount of time required to build a light rail, is so long that it’s just not worth it for developers.
Finally, Leinberger who uses the early developers of regional rail and light rail as his model, forgets that they had a few different things going for them that made their 19th century projects a success:
- low labor costs
- control of LOTS of land. (Now its scattered sites, and even if you could control all the land, the market for people to move into these new neighborhoods would be a HUGE risk that no developer would take on, at least not in a city, maybe for greenfield development, and definitely not in this economy)
- fair grounds: Lots of these developers had fairgrounds at the end of their lines, transit use was actually much higher on the weekends when people went to the fairs. That won’t work these days with much more competition for our entertainment dollars.