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Role of Transit Service Providers in Land Development

Executive Summary

Livability and sustainability have been identified as top priorities by three government agencies, including the Department of Transportation, the Department of Housing and Urban Development, and the Environmental Protection Agency. In this inter-agency coordinated effort, transit systems are recognized as a bridge between urban development and transportation development that plays a key role towards achieving the livability and sustainability goal. While various transit development initiatives, such as integrated transit and land development and transit-oriented development, have been proposed in the past, many transit agencies in the United States are experiencing declining ridership and increasing dependence on government subsidies for operating costs. Compared to the US, several foreign counties have been very successful in transit development. One particular strategy is to encourage (and subsidize) transit service providers to compete and invest in land development. The strategy helps to fortify the connection between transportation and urban development, which in turn benefits the society in terms of livability and sustainability. This strategy might be a potentially promising policy alternative that can be modified and applied in the US. This research aims to explore the practice of transit agencies investing and participating in land development.

By means of a comprehensive literature review and an online survey sent to government planning agencies, land developers, and transit agencies, data was collected and analyzed to reveal trends regarding investment in land development, participation in land development, and the influence of government policies on transit‘s decision to invest. Though the survey data was not large enough for statistical analysis, it showed some trends that are consistent with the findings of the literature review. Those trends are the relationships between transit agency participation in land development and policies such as parking, initial funding, communication between stakeholders, recognition of the benefits of involvement, and the availability of land developer expertise. However, no clear trend was identified regarding the relationship between zoning policies and transit agency involvement in land development and the relationship between trip reduction ordinances and transit agency involvement in land development. Attitudes towards and awareness of the practice of transit investing and participating in land development were also identified. This study is helpful in identifying barriers that need to be overcome in order for transit agencies to reap the benefits from investing and participating in land development.

This study also conducted a cost-benefit analysis on data from the financial reports of two agencies praised in the literature for their involvement and investment in land development. These agencies are the Washington Metropolitan Transit Authority and the Mass Transit Rail Corporation. The analysis showed that participation yields significant profits, but participation coupled with investment is extremely profitable, with a calculated internal rate of return for the MTRC‘s property development activities being 571%.

Future research, perhaps with a larger study, will be able to confirm or disprove these trends. A more detailed feasibility study is definitely proposed for future research, as is a study that takes into account user opinions on the practice of transit investing and participating in land development.