Friday, April 9, 2010

What Did I Just Say

I wasn't exactly going out on a limb or exploring any new ground outside of logic and common sense, but today the DMN has an article on NCTCOG's own explorations into private funds in support of the Cottonbelt line. The basics:
With transportation funds running short at every level, regional planners for the North Central Texas Council of Governments are seeking permission to lead an unusual partnership with private investors so they can fast-track a 62-mile rail line known as the Cotton Belt corridor...

As with toll road deals, private partners who invest in rail lines would insist that every service decision – from ticket costs, to station locations, to schedules and parking fees – be examined with an eye on how much revenue they could produce.
This is what I said just a few days ago:
Now the real brain damage can start: how to pay for the construction of something that, like all transportation, rarely pays for itself, has high initial startup costs, and a return that is disconnected from its investment. Because it does generate returns for landowners near to lines, increased tax base for cities, development opportunities for private investment, and eventually increased mobility due to the associated high density development that accompanies new streetcar lines, we are confident that it will take creative public-private partnerships to see the vision through.
Here is where it gets sticky. The investors would be looking at conventional revenue generation, i.e. fares and fees to generate their return. I suppose that could work, but in a world where all transportation is essentially a sunk cost in the name of commerce and interconnectivity (and in this case increased land value), that could raise fares to a rate that might be a barrier to utilization, driving down ridership, and in turn, rate/date of return on investment. That, or the public agencies must dig really deep to pay back investors first and take all operations at a heavy loss. The structure of this deal can work in that those with the most long-term benefit, the cities/public agencies, are essentially taking a loan from private investors in order to raise enough upfront capital to build the line.

Perhaps, we should look back at the history of rail (heavy rail and streetcars) in order to locate private investors. Rail and streetcars were originally funded by landowners with the most to gain, speculators looking to unlock the potential of their newly acquired property for residents seeking to escape the squalor and poverty of 19th and early 20th century industrial cities. Other investors were new industries created outside of cities. They wanted to either deliver workers to the job site or in the case of company towns, deliver their mined material back to cities.

It was an exploratory phase, not unlike the motivations and mechanisms propelling the latest exploratory phase, as we know as, sprawl. On the timeline of city evolution, which is longer and therefore slower than most humans can comprehend, it is our way of testing out the real value of land. For example, we are finding that some areas of sprawl will still have value and will see reinvestment in the form of increased density and walkability, while others fade back to nature or agricultural production, etc.

Like then, those that have the most to gain from investing in new transit lines within the amorphous post-modern city are (possibly but not definitely in order of magnitude):
  1. the landowners in an around the stations where their potential value would be increased (increment to be determined),
  2. businesses nearby to stations who would benefit from employees/customers within walking distances,
  3. the prior two combined with the potential decrease in parking demand thus allowing for reduced parking land area, parking fees, and infill opportunities,
  4. the transit agency (obvious stake in the game) who could build a parking facility with revenue generation to support transit station and reduce the amount of surface parking mentioned previously. Remember: parking should rarely if ever be free,
  5. cities. more long-term benefit through reduced traffic capacity, improved intracity connectivity, more dense development, and increased tax base.
  6. the riders. Obviously, they will be paying the fares. Unless we were able to get to a free fare system due to enough investors above that see the value in the above and can guarantee their returns indirectly by way of something other than fares.