Urban Development on Railway-Served Land:Lessons and Opportunities for the Developing WorldRobert CerveroWORKING PAPERUCB-ITS-VWP-2009-13

December 2009

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UrbanDevelopmentonRailway‐ServedLand:LessonsandOpportunitiesfortheDevelopingWorld

RobertCerveroUniversityofCalifornia,Berkeley

December2009

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1. Introduction Theoryandexperiencesshowthat,undertherightconditions,railtransitinvestmentscanpowerfullyshapecitiesandregions.Amongthe“rightconditions”areserioustrafficcongestion,apermissiveregulatoryenvironment,andfrequentandreliabletransitservices.Trafficcongestionisapre‐conditionbecauseonlythencanrailservices–especiallyondedicatedandgrade‐separatedrights‐of‐way–providetraveltimesavingsrelativetotheprivatecar.Zoningandotherregulatorytoolsmustalsobeinplacetoallowbuildingdensitiestobestackedupinandaroundrailstations.Andservicesmustbedependableiftransitistoappealtocar‐owning,choiceconsumers. Partofthereasonforrailtransit’scity‐shapingpowersisduetomarketforcesandpartduetopolicyinterventions.Byenhancingaccessibility–theabilityofthoseliving,working,orshoppingrailnearstopstoquicklyreachdesireddestinations–railservicesincreasethevalueanddesirabilityofpropertiesinandaroundstations.Thereis,however,alimited,finitesupplyofparcelswithsuperioraccessibilityinanycity.Tothedegreearailinvestmentconfersaccessibilitybenefits,marketpressurestointensifydevelopmentaroundrailstationsraiselandvalues.Effectively,theaccessibilitybenefitsgetcapitalizedintothepriceofland.Thisisnotautomatic,however.Insomecitiesofthedevelopingworld,likeMexicoCity,developmenthasoftenturneditsbackonmetrostationsincommercialdistricts.Thishassometimesbeenduetothedis‐amenitiesassociatedwiththeinformaleconomy–e.g.,streetvendors,illicitactivities(perceivedorreal),andcasuallaborwhooftencongregateinbusyareaslikestationareas.Classdivisionsandsecurityconcernscanmeanlowerdensitygradientsinandaroundstations. MarketpressuresbythemselvesrarelyproducewhatiscommonlyreferredtodayasTransitOrientedDevelopment,orTOD(Calthorpe,1993;BernickandCervero,1997;Cerveroetal.,2004).Toleverageprivateinvestmentsinandaroundstation,pro‐activismandacertainamountofrisk‐takingonthepartoflocalgovernmentsareoftenneeded.Supportiveandcomplementaryactivities–suchaspermissivezoning,under‐writingoflandcosts,helpwithlandassembly,andtargetedinfrastructureinvestmentslikesidewalksandlightingimprovementsinstationareas–areparticularlyneededinmarginalorstagnanturbandistrictswheremarketdemandfornewdevelopmentisweak.2. RailInfrastructureandGrowthImpacts:Issues Onefirstissuesencounteredinaddressingthedevelopmentimpactsofrailtransitinvestmentiswhethertheyaregenerativeorredistributive–i.e.,dotheseinvestmentscreatenewandrealeconomicgrowth(byenticinginvestmentsintoaregionthatwouldotherwisenotoccur)orinsteadredistributegrowth(e.g.,fromonepartofaregionun‐servedbyrailtoanotherpartofaregionthatis).Simplestatisticsrevealapositiveassociationbetweenpublictransitinvestmentsandregionalincome.Dataon52globalcitiesfromtheMobilityinCitiesDatabaseoftheUITP(InternationalAssociationofPublicTransport,2006)showsamoderately

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strongandpositiveassociationbetweenGrossDomesticProduct(GDP)andinvestmentsinpublictransportexpressedonapercapitabasis(Figure1).Whilecorrelationdoesnotmeancausation,transportinfrastructureappearstomatter:GDPpercapitatrendsupwards€63foreveryEurospentonpublictransportperinhabitant.ThisstrongpositiveassociationofrailinvestmentsandservicesoneconomicperformancelikelyreflectsthedominanceofEuropeancitiesintheUITPdatabase(46ofthe52observations).ManyEuropeancitiesboastworld‐classrailwaysystemsmatchedbyhighridershiplevels(Cervero,1998).Onlywithhigh‐qualityrailservicescanthekindsofagglomerationeconomiesbeachievedthatdrawshighvalued‐added,knowledge‐basedindustriesinfinance,legalservices,andprofessionalconsultingtothecentralcity.EvenintheU.S.,studiesshowthatinbig,densecitieswithrobustandgrowingeconomies,rail‐transitinvestmentsoftenyieldhigheconomicratesofreturn(CambridgeSystematics,Inc.andApogeeResearch,1996).Thuswhilesomeanalysts(Giuliano,2004;Forkenbrock,2002)contendthattheimpactsoftransportinfrastructuretendtobemoreredistributivethangenerative,becauserailsystemssupportveryhighurbandensities,theagglomerationbenefitsthatoccurfromanyspatialredistributionthatmightoccurcanbesubstantial,certainlymoresothaninthecaseofroadsandhighways.Thehigh‐risefinancialdistrictsofglobalhubslikeNewYorkCity,Tokyo,HongKong,andLondoncouldnotbesustainedwithoutrailservices.Therecanbenodoubtthatthepresenceofrailhasbeenbothaprerequisiteandaresponsetoverydenseurbanagglomerationsinsuchcities–i.e.,theyareco‐dependent.Andtherecanalsobenodoubtthatmoreregionalgrowthoccurredduetotheknowledge‐basedandserviceindustriesfoundinthedowntownsofsuchrail‐servedcitiesthanwouldhaveotherwiseoccurredandthatresultingagglomerationeconomieshaveincreasedregionalincomeandwealth.Thuswhilerailmightstronglyredirectwheregrowthoccursinaregion,theredistributionlikelycreatessignificantgenerativeeconomicgrowth.

Figure1.ScatterplotsofGDPpercapita(inEuros)andAnnualPublicTransportExpenditurespercapita(includingcapital,operations,andmaintenance),51GlobalCities,2001.

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Anotherissuefoundintheliteratureontransportinfrastructureandurbangrowthiswhetherinvestmentsarealeadoralagfactor.Dorailwayinvestmentsspurfutureurbangrowthordoinvestmentstendtobetargetedatareasexperiencingrapidgrowthandincreasedtrafficcongestion?Whilenodefinitivestudyhasbeenconductedonthisquestionforrailtransit,inthecaseofhighwayinvestments,therelationshipsaremixed.Numerousstudieshaveshownhighwayinvestmentsinducebuildingactivities(Cervero,2002),someworksuggeststheoppositealsoholds–onestudy,forexample,showedthathighwayinvestmentsinmetropolitanChicagocouldbebetterexplainedbypopulationgrowthratesadecadeearlierthanvice‐versa(UrbanTransportationCenter,1999).Arelatedissueiswhetherrailinvestments“crowd‐in”or“crowd‐out”privateinvestments–i.e.,wouldasmuchregionaleconomicgrowthoccurinthetaxdollarsusedtofinancerailwayinvestmentsremainintheprivatesector?Conventionalwisdomholdsthatinrapidlygrowthareaswithstrongrealestatemarkets,“crowdingin”isastrongerforce(Cervero,1998).Whatisunequivocalistheobverse:railwayinvestmentsareincapable,bythemselves,ofturningaroundstagnantorlaggingrealestatemarkets. Whiletheaccessibilitybenefitsconferredbyrailwayinvestmentsdeterminesthedegreetowhichland‐usechangesoccur,accessibilityisstronglyinfluencedbythetypeoftransittechnology.Subwaysandothergrade‐separated,dedicated‐right‐of‐wayservicesenjoyspeedadvantageswhichforanexpansivenetworkmeanhighaccessibility–i.e.,theabilitytoreachnumerousdestinationsquickly(particularlyincomparisontotheprivatecar).Howeverfasterspeedsarealsoduetorail’slowercoefficientoffriction,whichwhencombinedwithrail’ssloweraccelerationanddecelerationtypicallyresultsinlongerstationspaces.Fromastandpointofland‐useimpacts,thecombinationofhighregionalconnectivityandlongerstationspacingtranslatesintodenser,morenodaldevelopmentthanothertransitmode(Figure2).Mixed‐trafficlight‐railoperations,incontrast,conferfewertravel‐timesavingsrelativetothecarandthusfeweraccessibilitybenefits.Thisinturnweakensmarketpressurestointensifyusesaroundstops.AndwithBusrapidtransit(BRT),stopsareoftenclosertogether(duetofasteraccelerationanddecelerationofrubber‐tiredvehicles),whichtendstocontributetomorelinealpatternsofgrowth–suchasCuritiba(Figure3).

3.CaseStudySummaries:Land‐UseImpactsofHeavyRailInvestments Empiricalevidencelargelyconfirmstheoriesabouttheland‐useimpactsofrailwayinvestments.ThissectionfirstreviewsexperiencesinNorthAmerica,contrastingcaseswithproactiveregionalplanning(Toronto,Canada)versusweakregionalplanningoversight(SanFranciscoBayArea).America’smostsuccessfulexampleofproactiveintegrationofheavyrailandlanddevelopment–WashingtonD.C.’smetrorail–isalsoreviewed.ThisisfollowedbytwosuccessfulEuropeancasesofusingheavyrailinvestmentstochannelgrowthaccordingtoalong‐rangeregionalland‐usevision–notably,Copenhagen,DenmarkandStockholm,Sweden.

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Figure2.RelationshipbetweenTransitTechnologiesandUrbanDevelopmentPatterns

Figure3.LinealDevelopmentPatternsofBusRapidTransit,Curitiba,Brazil

3.1 Toronto:LeveragingaMetrorailInvestmentThroughPro‐activePlanning

Toronto,Canada,isoftenheraldedasthebestNorthAmericanexampleofrailtransit’scity‐shapingabilities.Theurban‐formimpactsoftheinitial24‐kilometersubwaysystem,openedoverthe1954to1966period,wereimmediateanddramatic.Duringthesubway’sfirstdecadeofoperations,aboutone‐halfofhigh‐riseapartmentsand90%ofofficeconstructioninthecityofTorontooccurredwithinafive‐minutewalkofatrainstation(Heenan,1968).Thesubwaynotonlytriggeredthedevelopmentofvacantorunderusedareas(somewithinafewkilometersofthecitycenter),butitalsospurredtherecyclingofdecayingin‐towncommercial

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buildingsandblightedparcels. OneofthegreatestaccomplishmentsofToronto’ssubwayhasbeentostrengthenthecentralbusinessdistrict(CBD)–partlyaconsequenceofaradial,downtown‐focusedsubwaysystembutmainlyaresultofstrategicregionalland‐useplanning.Toronto’sCBDhasamongthehighestlevelsofemploymentandretailprimacyinNorthAmerica–i.e.,veryhighsharesofregionaljobsandretailactivitiesinthecore.AstrongCBDhasinturnedspawnedhighridershiplevels–about65%ofalltripsenteringtheCBDandhistoricallywellover200transittripspercapitaperyear,higherthaninanyU.S.metropolitanarea,includinggreaterNewYork.Theseoutcomesaredueinconsiderableparttothepresenceofaregionalplanningbody(Metro)whosechiefresponsibilityhasbeentoorchestrateregionalgrowth,inparticulartheco‐developmentofrailwayservicesandlanddevelopment. WhyhasTorontobeensosuccessfulinmakingthetransit‐landusenexuswork?TheingredientstoToronto’ssuccesswerepartlyduetoexogenousforcesbutprimarilyduetopurposefulpublicpolicies(i.e.,endogenousfactors).Thechiefexogenousfactorwasgoodtiming–notably,thesubwayinvestmentcoincidedwithaperiodofrapidgrowth(atitsheight,45,000newresidentsperyear),meaningrailtransitwaswell‐positionedtoshapewheregrowthoccurred.Additionally,manyoftheresidentswerelow‐skilledimmigrantsfromabroadwhoweretransitdependent(andwereprovidedsocialhousingsitednearsuburbanrailstations).Theytendedtosupporttherailwaysystematthefareboxandtheballotbox. Carefullyreasonedpublicpolicies,atboththefederalandnationallevels,alsocontributedtotheland‐usesuccessesofToronto’srailwayinvestments.Federaltaxlaws,forexample,donotallowhome‐ownerstodeductmortgageinterestpaymentsandpropertytaxesfromincometaxes,whichhasresultsinlowerratesofsingle‐familyhome‐ownership.Similarly,Canada’snationalgovernmentdoesnotsponsorfreewayconstruction,asisthecaseintheU.S.,whichhasresultedinfewerfreewaylane‐milesinCanadiancitiesthancomparablesizeU.S.ones.Earlyfreewayrevoltsfurtherreducedtheautomobile’senvironmentalfootprintinToronto.Withoutquestion,however,theonefactorthatbestexplainsthesubway’sstrongcity‐shapingimpactshasbeenpro‐active,coordinatedland‐useplanningandmanagementconductedbyToronto’smetropolitangovernment.Whilezoninghasalwaysbeencontrolledbyindividualmunicipalitiesintheregion,themetrogovernmentretainedvetopowersoverlocalland‐usedecisionsthatwereinconsistentwiththelong‐rangetransportation‐landuseplan.AmongtheinitiativesintroducedbytheMetrogovernmenttoleveragelanddevelopmentweredensitybusesforparcelsnearrailstations,limitsonpark‐and‐rideconstructionatnon‐terminalstations,transferabledevelopmentrights(thatenableddensitiestobestackednearrailstations),andsupplementallandacquisitionthatenabledlocalgovernmenttoleaseandselllandnearrailstopsbothtorecapturevalueandensurehighridershiplevels.

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3.2 SanFranciscoBayArea:BARTHeavyRailSystem IncontrasttometropolitanToronto,growthintheSanFranciscoBayAreafollowingthe1973initiationofregionalrailservices–theBayAreaRapidTransit(BART)system–hasbeenshapedalmostexclusivelybyfree‐marketforces.TheabsenceofaregionalplanningcounterparttoToronto’sMetrohasleftstation‐areadevelopmentdecisionslargelyinthehandsofprivatereal‐estateinterestsandthewhimsofmunicipalzoning(CerveroandLandis,1997). TheoneimpactofBARTthatmostcloselyparallelsToronto’sexperienceshasbeenthepreservationoftheCBDastheregion’sprimaryemploymenthub(i.e.,retainingitsprimacy).DuringBART’sfirst20years,some2.6millionsquaremetersofofficefloorspaceandmorethan60,000newjobswereaddedwithin½kilometerofdowntownBARTstations.ThisgrowthwouldnothaveoccurredwereitnotforBARTsimplybecausethebridgesthatconnecttodowntownSanFranciscocouldnotaccommodatetheadditionalcartrafficgeneratedbythisdramaticemploymentgain.Theuseoftaxincrementfinancing(whereinallproceedsfromthetaxbasearereturnedtothestationareastopayforotherpublicimprovements,suchaslandscapingandcivicplazas)wasinstrumentalinspurringdowntownofficedevelopment. OutsideofdowntownSanFrancisco,BARThasbeenastrongerforcetowarddecentralizationthanconcentration.Byaddingnewlayersofaccessibilitytooutlyingareas,BARTenabledmoresubdivisionstobebuiltthanwouldhaveotherwisebeenpossibleduetolimitsonfreewaycapacity.OtherthanahandfulofstationsinSanFrancisco’sEastBaywheredevelopmentwasaggressivelysought,littlenewclusteringhasoccurredalongBART’ssuburbanalignments.Indeed,moresuburbangrowthwasfreeway‐orientedthanrailway‐oriented.AmongthesuburbanareasthatpracticedToronto‐likepro‐activeplanning,notablythemunicipalitiesofWalnutCreekandPleasantHill,significantclusteringoccurred.Forthemostpart,substantialsubsidieswereneededtojump‐startdevelopment,suchasunderwritingoflandassemblagecostsandthetargetingofsupportiveinfrastructureimprovements(e.g.,newsidewalksandbetterroadaccesstonearbyfreeways).InthecaseofPleasantHill,surveysofresidentslivingneartherailstationrevealthat45%ofemployed‐residentsregularlytakeBARTtoworkversusonly8%ofthosewholiveinthecitybutbeyonda½‐milewalkshedofthestation(Lundetal.,2006).Researchsuggeststhisridershipbonusislargelyaproductofself‐selection–forlifestylereasons,peopleconscientiouslyresideneartransitinordertocommutebytransit(Cervero,2007).OtherfactorsthathelpexplainPleasantHill’ssuccesswithtransitorienteddevelopment(TOD)includeagoodstation‐areaplan(thatwasillustrativeandmarket‐realistic)andthepresenceofapoliticalchampionwhoprovidedtheleadershipnecessarytoshepherddevelopmentproposalsthroughtheminefieldsoflocalpublichearingsandenvironmentalreviews.3.3 MetropolitanWashingtonandArlingtonCounty MoregrowthhasoccurrednearmetropolitanWashingtonD.C.’sheavyrailsysteminthepastquarter‐centurythananywhereintheUnitedStates.From1980to1990,40%ofthe

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region’sofficeandretailspacewasbuiltwithinwalkingdistanceofaMetrorailstation(Cerveroetal.,2004).Thefactthatthetimingoftherailwayinvestment(late1970sthrough1980s)coincidedwitharapidperiodofgrowth(e.g.,morejobswereaddedtometropolitanWashingtonthananywhereintheU.S.)helpedsteergrowthtorail‐servedcorridors.This,combinedwithheight‐limitrestrictionswithintheDistrictofColumbiaandfederalpolicythatmandatesgovernmentofficestobelocatednearrailstations,furtherencouragedTOD. Withoutquestion,therecipientofmostspillovergrowthfromWashingtonD.C.hasbeenArlingtonCounty,Virginia,acrossthePotomacRiverfromthenationalcapital(Cerveroetal.,2004).ArlingtonCountyisatextbookexampleofcreatingavision(the“bull’seye”conceptplan,showninFigure4)andputtinginplaceappropriateimplementationtoolstoachievethevision.Throughacollaborativeeffortthatengagedlocalstakeholdersandanambitiouscampaignthattargetedsupportiveinfrastructureimprovementstorailstopsalongthecorridor,ArlingtonCountymanagedtotransformtheMetrorailOrangelineintoashowcaseoftransit‐supportivedevelopment,withmid‐to‐highrisetowersandmultipleusestodayflankingtheRosslyn,Courthouse,Clarendon,VirginiaSquare,andBallstonMetrorailstations.Since1970,over15millionsquarefeetofofficespace,severalthousandhotelrooms,and18,000housingunitshavebeenaddedtothesestationareas.Withthebull’seyemethaphorinplacetoguideon‐goingplanning,ArlingtonCountyproceededtoleverageMetrorail’spresenceandtransformoncedormantneighborhoodsintovibrantclustersofoffice,retail,andresidentialdevelopment. Thetransformationofonce‐ruralArlingtonCountyintoashowcaseofcompact,mixed‐useTODhasbeentheproductofambitious,laser‐focusedstation‐areaplanningandinvestment.PriortoMetrorail’sarrival,ArlingtonCountyplannersunderstoodthathigh‐performancetransitprovidedanunprecedentedopportunitytoshapefuturegrowthandproceededtointroducevariousstrategies—targetedinfrastructureimprovements,incentivezoning,developmentproffers,permissiveandas‐of‐rightzoning—toenticeprivateinvestmentsaroundstations.Afterpreparingcountywideandstation‐areaplansondesiredland‐useoutcomes,densityandsetbackconfigurations,andcirculationsystems,zoningclassificationswerechangedanddevelopmentsthatcompliedwiththeseclassificationscouldproceedunencumbered.TheabilityofcomplyingdeveloperstocreateTODs“as‐of‐right”wasparticularlyimportantforitmeantdeveloperscouldlineupcapital,secureloans,incurupfrontcosts,andphase‐inconstructionwithoutthefearoflocalgovernment“changingitsmind.”

Thepay‐offofconcentratedgrowthalongrailcorridorsisrevealedinArlingtonCounty’stransitridershipstatistics.TheCountytodayboastsoneofthehighestpercentagesoftransituseintheWashington,D.C.region,with39.3percentofMetrorailcorridorresidentscommutingtoworkbypublictransit.ThisistwicetheshareofCountyresidentswholiveoutsideofMetrorailcorridors.Self‐selectionisevidentinthataroundtwo‐thirdsofemployed‐residentsinseveralapartmentsandcondominiumprojectsnearRosslynandBallstonstationstaketransittowork.Animportantoutcomeofpromotingmixed‐usedevelopmentalongrailcorridorshasbeenbalancedjobsandhousinggrowthwhichinturnhasproducedbalancedtwo‐waytravelflows.CountsofstationentriesandexitsinArlingtonCountyarenearlyequal

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duringpeakhoursaswellastheoff‐peak.Duringthemorningrushhours,manyofthecounty’sMetrorailstationsarebothtriporiginsanddestinations,meaningtrainsandbusesarefullinbothdirections.Thepresenceofsomuchretail‐entertainment‐hotelactivitiesalongtheCounty’smetrorailcorridorshasfurtherfilledtrainsandbusesduringthemiddayandonweekends.Balanced,mixed‐usedevelopmenthastranslatedintoascloseto24/7ridershipprofileasanyU.S.settingoutsideofaCBD.

Arlington County

Figure4.ArlingtonCounty’sRosslyn‐BallstonCorridor:From“Bull’sEyeConcept”toImplementation3.4 ScandinavianExperiences:MetrosinCopenhagenandStockholm Thebestexamplesoflong‐rangeplanningvisionsshapingrailinvestmentswhichinturnedshapedurbangrowthcomefromtwoScandinaviansettings:Copenhagen,withitscelebrated“FingerPlan”andStockholm,intheformofits“PlanetaryClusterPlan”.Inbothcases,corridorsforchannelingoverspillgrowthfromtheurbancentersweredefinedearlyintheplanningprocess,andrailinfrastructurewasbuilt,ofteninadvanceofdemand,tosteergrowthalongdesiredgrowthaxes.Asimportantly,greenbeltwedgessetasideasagriculturalpreserves,openspace,andnaturalhabitatswerealsodesignatedandaccordinglymajorinfrastructurewasdirectedawayfromthesedistricts.TheevolutionofCopenhagenfromaFingerPlan,toadirectedrail‐investmentprogramalongdefinedgrowthaxes,tofinger‐likeurbanizationpatternsisrevealedbyFigure5.

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Figure5.Copenhagen’s“TransitFirst”SpatialEvolution:FromFingerPlan,toFive‐AxisRadialInvestment,toCorridorsofSatellite,Rail‐ServedNewTowns

InthecaseofStockholm,thelasthalf‐centuryofstrategicregionalplanninghasgivenrisetoaregionalsettlementandcommutationpatternthathassubstantiallyloweredcar‐dependencyinmiddle‐incomesuburbs.Stockholm’sinvestmentinradialraillineshasgivenrisetoa“stringofpearls”urbanformwhereinabalanceduseoflandforworkandhousing.YetStockholmhasrelativelyhighlevelofcarownership(555cars/1000inhabitants).Withtransit‐orientedcorridors,onefindsmorejudiciousanddiscriminateuseoftheprivatecar.MostStockholmersusepublictransportforthedailygrindofgoingtowork,selectivelyusingcarsforshoppingandweekendexcursions.Stockholmplannershaveconsciouslycreatedjobs‐housingbalancealongrail‐servedaxialcorridors.Thisinturnhasproduceddirectional‐flowbalances.Duringpeakhours,55percentofcommutersaretypicallytravelinginonedirectionontrainsand45percentareheadingintheotherdirection.Stockholm'stransitmodalshareisnearlytwicethatfoundinbiggerrail‐servedEuropeancitieslikeBerlinandevenhigherthaninnerLondon'smarketshare.Perhapsmostimpressive,Stockholmisoneofthefewplaceswhereautomobilityappearstobereceding.Between1980and1990,itwastheonlycityinasampleof37globalcitiesthatregisteredapercapitadeclineincaruse‐‐adropoffof229annualkilometersoftravelperperson(KenworthyandLaube,1999). Whilethefirst‐generationofTODinmetropolitanStockholmwasonformergreenfields(e.g.,VallingbyandKista),inrecenttimesapushhasbeenmadetopromote“GreenTODs”onformerbrownfields.ThemostnotableexampleofthisisHammerbySjöstad,aneco‐communitythathastakenformalongarecentlybuiltinner‐ringtramway.HammerbySjöstadisamarriageofTODandgreenurbanism/greenarchitecture.Thecombinationofrailwayservices,car‐sharing,andbike‐sharinghasdramaticallyreducedVKT/residentsandcorrespondinglygreenhousegasemissionsandenergyconsumption.Andthedesignofanenergyself‐sufficientandlow‐wastecommunityhasshrunktheproject’senvironmentalfootprint.Today,residentsofHammerbySjöstadproduce50%ofthepowertheyneedbyturningrecycledwastewateranddomesticwasteintoheating,cooling,andelectricity.

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4. ExperienceswithOtherRailwayInvestments Whataffectshaverailwayinvestmentsotherthanheavyrail/metrosystems–notablylight‐railtransit(LRT),tramways,commuterrailways,andhigh‐speedrail(HSR)–hadonlanddevelopment?Lesssystematicresearchhasbeenconductedontheland‐useimpactsoftheseinvestments,althoughusefulpolicyinsightscanstillbegainedfromexperiencesrecordedtodate.4.1 Light‐RailTransit InthecaseofLRT,therehasgenerallybeenlesshigh‐rise,clustereddevelopmentaroundstationsthanhasbeenthecasewithmetrosmainlybecausethesloweroperatingspeeds(duetofactorslikemixed‐trafficoperations,at‐gradeintersectioncrossings)whichhavemeantlesstime‐competitivenesswiththeprivatecarandfewerregionalaccessibilitybenefits(CerveroandSeskin,1995).ThefactthatmanyLRTsystemshaveservedalimitedsetofcorridorsvis‐à‐visthemoreregionalscopeofmanymetroserviceshavefurthersuppresseddevelopmentimpacts.Anotherlimitingfactorhasbeentheconscientiousdecisiontositeinvestmentsinlow‐costcorridors–e.g.,freewaymedians,dis‐usedorabandonedfreightrights‐of‐way(Cervero,1984).Thefocusoncost‐minimizationhasinturnedminimizedLRT’sdevelopmentimpacts.Thereareexceptions,however,suchasMockingbirdStationatthesuburbanDallasAreaRapidTransit(DART)light‐railstation.LocatedfourmilesnorthofdowntownDallas,MockingbirdStationisamixed‐use,urban“chic”villagelinkeddirectlytoalightrailstation(afterwhichitisnamed)viaawelcomingpedestrianbridge.Theassemblageofoffices,shops,restaurants,andloftsnearthestationcostaround$145milliontobuild,asubstantialsumgiventhatsucha“product”hadabsolutelynotrack‐recordincar‐friendlyTexas.In2003,residentialrentsattheMockingbirdstationweregoingfor$1.60persquarefootpermonth;othercomparablenearbypropertiesnotservedbytransitweregetting$1.30,or20%less.OneofthebestexamplesofLRTtriggeringadowntownbuildingboomisJerseyCity,NewJersey(Cerveroetal.,2004).The15‐mileHudson‐BergenlightrailsystemhasservedtochannelgrowthalongJerseyCity’sburgeoningwaterfront,interlacingseveraldozenrecentlybuiltmid‐andhigh‐riseoffice,retail,andhoteltowers.Withinthe2.5square‐kilometerdowntownJerseyCitydevelopmentdistrict,the22parcelsadjacenttothelight‐railtrackscomprisethemajorityofthe11.8millionsquarefeetofcommercialspacebuiltdowntownduringthe1998‐2004periodandover40percentofhousing‐unitadditions(Figure6).Andwithintwocityblocks(or750feet)oftheLRTtracks,allofJerseyCity’sofficeandhoteladditionsandoverthree‐quartersofhousingunitshavecongregated.MuchofthisgrowthisattributabletoofficeactivitiesspillingoverfromManhattanacrosstheHudsonRiver(includingthe12millionsquarefeetofofficedevelopmentdisplacedatthelowertipofManhattanbythe9/11tragedy).TheHudson‐Bergenlineservedasapowerfulmagnet,focusingthegrowththatmigratedfromManhattantotherail‐servedcorridor.

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Figure6.ShareofDevelopmentActivityNearLightRailLinein2.5Square‐KilometerDowntownJerseyCity,1998‐2004

4.2 CommuterandHigh‐SpeedRail Commuterpassengerrailsystemsthatfunnelprofessional‐classworkerstoCBDsoflargemetropolitanareashavemimickedtheland‐useimpactsofmetrosystems:asradialsystems,theyhavestrengtheneddowntowns,allowingmorejobsandretailactivitiestoconcentrateinurbancoresthanwouldotherwisebepossible(Cervero,1998).Howevertheyhavealsospurreddecentralization,enablingmorefringe‐areasubdivisionstobebuiltthanwouldotherwisebepossible.StudiesshowthattheconstructionoftheGOTransitcommuterrailsysteminmetropolitanTorontoacceleratedsuburbanizationandexurbanization,promptingoneobservertoequatetheregion’ssettlementpatternas“ViennasurroundedbyPhoenix”(Pill,1990). High‐SpeedRail(HSR)areinapositiontohavestrongergrowth‐inducinginfluencesthanmetrorailsystemsbecausetheyaddsubstantiallyhigherincrementsofaccessibility,particularlyalongruralcorridors.ButbecauseHSRlargelycompeteswithinter‐cityairtravel,

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thekindsoflandusesthatcouldbeexpectedtocongregatearoundHSRstopsdiffersfrommetropolitanrailsystems.SincerelativelyfewpeopleregularlycommutebyHSR,lessresidentialclusteringisexpectedatHSRstations.Atterminuses,officesandcommercialusesmightbeexpectedandatotherstationsthereisthepotentialfordiscretionarydestinationsthatattractpeopleperiodically,likeconvention‐hotels,largeretailcenters,andentertainmentcomplexes. Thebestinsightsaboutthecity‐shapingimpactsofHSRcomefromJapan’sShinkansenHSRsystem.TheTokaidoLinethatopenedfromTokyotoOsakain1964hadastrongerimpactonemploymentthanresidentialgrowth,withmuchoftheofficeandcommercialconstructionconcentratingattheterminalstationsofthesetwoprimarycities(Sawada,1995).RestaurantandhotelbusinesseshavealsoprosperedalongShinkkansencorridors,reflectingsocial‐recreationaltraveltocitieswithShinkansenstations(NakamuraandUeda,1989).Sands(1992)contendsthattheShinkansen’sgrowth‐relatedimpactsarepartlyattributabletotheconsciousdecisiontorouteHSRinareasexperiencingorexpectedtoexperiencegrowth,makingoutcomesaself‐fulfillingprophesy.ThereissomeevidencethattheShinkansensystemenlargedTokyo’scommuteshed,madepossiblebythetrendtowardpart‐time,contingentlabor(whereinworkersonlygototheheadofficeafewdaysperweek)(Sanuki,1994). OutsidetheprimarycitiesofTokyoandOsaka,urbangrowthoccurredmostlywheresubstantialinvestmentwasmadeinsecondaryfeederraillinesthatconnecttotheHSRstation.ThishasbeenthecaseattheShin‐Yokohamastation,whichhaswitnessedthefastestridershipgrowthofanyShinkansenstationtodate.InvestmentinasubwayconnectiontotheShin‐Yokohamastationplusancillaryinfrastructureimprovements(e.g.,sanitation)spurredsignificantland‐useshiftstocorridorsthatfeedintotheHSRstation(Amanoetal.,1995).Someobservershavereferredtotheconcentrationofnewlanddevelopmentalongsecondaryfeederanddistributornetworksas“ExtendedTOD”,effectivelyextendingthesptialreachofHSRandmetroinvestmentsbyovercomingwhathasbeencalled“thelast‐mileproblem”(i.e.,thedifficultyofreachingdestinationsbeyondamileofmanynon‐urbanrailstations(Warren,1997).

5. PolicyLessonsSummaryonRailTransitandUrbanDevelopment

Globalexperienceswithrailinvestmentsimpartimportantlessonsabouttheirlikelyimpactsonurbanform.WhilemostresearchandrecordedexperiencesaredrawnfromNorthAmerica,Europe,andelsewhereinthedevelopedworld,thelessonsarethoughttobegenericandcertainlyapplicabletorailwaysystemsinLatinAmerica.TheselessonslargelydrawfromtheliteraturereviewsandcasesummariesofKnightandTrygg(1977),Kelley(1994),Huang(1996),Cervero(1984,1998),andCerveroandSeskin(1996).

• Urbanrailwaysredistributegrowthmorethanitcreatesgrowth.Railwaysinfluencethedistributionmorethantheamountofdevelopmentwithinaregion.Itchannelswhere

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alreadycommittedgrowthoccurs,oftenshiftingitfromoneradialcorridor(i.e.,higway‐orientedone)toanotherradialcorridor(i.e.,arail‐servedone).Inbig,congestedurbansettings,thisredistributioncantranslateintoneteconomicandemploymentgrowth,mainlyintheformofagglomerations(i.e.,tallerbuildings)andtheassociatedeconomicbenefitsmadepossiblebyrailwayinvestments.

• Aprerequisitetosignificantland‐usechangesisahealthyregionaleconomy.Ifrailwaysaretohavemuchimpact,thereneedstobegrowthtochannel.Regardlesshowmuchpro‐activeplanningoccursorpublic‐sectormoneyisspent,railwayswillexertnegligibleland‐useimpactsinareaswithweakregionaleconomies.Themeagerland‐usechangesfollowingtheintroductionoflight‐railservicesinU.S.RustBeltcitieslikePittsburghandBuffaloarecasesinpoint.

• Land‐useimpactsaregreatestwhenrailwayinvestmentsoccurjustpriortoanupswinginregionalgrowth.Experiencesshowthatthetimingofrailwayinvestmentsmatteralotintermsofwhethersignificantland‐useshiftsoccur.NotedurbansociologistHomerHoytobservedsome70yearsagothaturbanformislargelyaproductofthedominanttransportationtechnologyinplaceduringacity’sprevailingperiodofgrowth(Cervero,1998).Toronto’ssubwayinvestmentinthelate1950sduringaperiodofrapidimmigrationtothecitywasfortuitoussincemanynewhousingprojectswerebuiltwithinwalkingdistanceofrailstations.Forothercities,likeLosAngeleswhichinvestedheavilyinsubway,LRT,commuterraillinesinthe1990s,muchoftheregion’surbangrowthhadalreadytakenplace,therewererelativelysmallincrementsfornewgrowthforrailwaystosteer–theproverbial“toolittle,toolate”.Formanyrapidlydevelopingcities,includingthoseinLatinAmerica,investinginrailwaysduringgrowthspurtscantranslateintoappreciableland‐useimpacts.

• Radialrailsystemscanstrengthendowntowncores.ExperiencesfromToronto,SanFrancisco,Tokyo,andelsewhereshowthatradialrailsystemsleadtoincreasedemploymentgrowthinurbancenterssincethesearetheplacesthatreceivethelargestincrementalgainsinregionalaccessibility(Figure7).Whileregionalsharesofjobsandretailingthataredowntownoftenstillfallinthewakeofnewrailinvestments,theywouldhavefallenevenmorewereitnotforCBD‐focusedrailwayservices.

• Railwaysystemsgenerallyreinforceandoftenacceleratedecentralizationtrends.Byimprovingaccessibilitytodifferentpartsofaregion,extensiverailwaynetworks,liketheirhighwaycounterparts,generallyencouragesuburbanization,tosomedegree(Figure7).Whilegrowthmightbefunneledinaparticulardirectionasaresultofnewtransitservices,moreoftenthannotthisdirectionwillbeoutward.

• Pro‐activeplanningisnecessaryifdecentralizedgrowthistotaketheformofsubcenters.Whetherdecentralizedgrowthtakesamulti‐centeredform(i.e.,TOD)restslargelywiththedegreeofpubliccommitmenttostrategicstation‐areaplanning,carriedoutonaregionalscale(Figure7).ExperiencesincitieslikeTorontoshowthatan

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aggressivestandtoleveragethebenefitsofrailservicescanleadtomoreconcentratedformsofdecentralizedgrowth.Givenpublic‐resourcecommitments,railwayscannotonlystrengthenthecore,butalsoinduceselectedsub‐centering.Whilerailwayscontriutetooutwardgrowth,theycanhelptomoreefficientlyorganizewhateverdevelopmentoccurswithintraditionalbuilt‐upareas.

• Railwayscanspurcentral‐cityredevelopmentundertherightconditions.Whengovernmentagenciesarewillingtoabsorbsomeoftherisksinherentinredevelopingdepressedandeconomicallystagnantneighborhoods,railwayscanhelpattractprivatecapitalandbreathenewlifeintostrugglingareas.Theremustbeanunwaveringpubliccommitmenttounderwriteredevelopmentcostsandprovideneededfinancialinvestments.Thequidproquoisthatsharinginupstreamriskscanmeanthepublicsectoreventuallysharesinthedownstreamrewardsofurbanrenewal.Experiencessuggestthatevenwithsuchinvestments,itisanuphillstruggletoturnaroundseveraldistressedurbandistricts,regardlessofarailway’spresence.Insuchsettings,theissueislessoneoftransportationaccessandoftenmoreoneofcrime,inter‐generationalpoverty,andprivatedis‐investment.

• Otherpro‐developmentmeasuresmustaccompanyrailwayinvestments.Inadditiontofinancialincentives,other“software”policiesareneededtomakerailway“hardware”attractivetolanddevelopers.Foremostamongtheseare:permissiveandincentivezoning,suchasdensitybonuses;theavailabilityofnearbyvacantoreasy‐to‐assembleanddevelopableparcels;supportforland‐usechangesamonglocalresidents(i.e.,theabsenceoforganizedoppositionandnot‐in‐my‐backyard,orNIMBY,forces);ahospitablephysicalsetting(intermsofaesthetics,easeofpedestriancirculation,andahealthyneighborhoodimage);complementarypublicimprovements(suchasupgradingofsidewalks,expansionofwaterandsanitationtrunk‐linecapacities,andburyingutilities);andanabsenceofphysicalconstraints(e.g.,preemptionoflanddevelopmentbypark‐and‐ridelotsorthesitingofastationinabusyfreewaymedian).

• Transitserviceincentivesandautomobiledisincentives(“equalizers”)helpininducingstation‐arealand‐usechanges.Provisionoffrequentandreliablerailandfeederbusconnectionsisofcourseneededifprivatecapitalistobeenticedtostationareassinceonlythenwillrailwaysbecometime‐competitivewiththeprivatecar.Suchpro‐transitmeasuresoftenneedtobeaccompaniedby“equalizer”policiesthatremovemanyofthebuilt‐inincentivestodrive,suchastheavailabilityofplentiful,low‐costparking.CongestionpricinginSingapore,Stockholm,andLondonpartlyexplainwhyrailwayservicesinthesecitiesaresoheavilypatronizedandnotun‐relatedly,whynewlanddevelopmentisoccurringaroundthesecities’railstations.

• Networkeffectsmatter.Forfixed‐guidewayrailwaysystemstoinducelarge‐scaleland‐usechanges,itisessentialthattheymimicthegeographiccoverageandregionalaccessibilityoftheirchiefcompetitors,limited‐accessfreewaysandhighways.Thestrongcity‐shapinginfluencesofmetrosinParis,London,andTokyooweinlargepartto

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suchnetworkeffectswhereinrailwaysservecomparablesharesoforigin‐destinationcombinationsasfreewayandmotorwaynetworks.Theadditionofanewexclusive‐guidewaylinecreatesspilloversandsynergies,benefitingnotonlythenewlyservedcorridorsbutexistingonesaswell.Forexistingmetrolines,newlyopenedlinesincreasethenumberofregionalorigin‐destinationcombinationsthatcanbeserved.Theabsenceofmajorland‐useimpactsfollowingtheopeningofLRTservicesintheU.S.arepartlyduetotheabsenceofsuchnetworkeffects–single‐lineLRTservices,suchastheHiawathaserviceinMinneapolis,serveafractionofregionalorigin‐destinationcombinationsthatareservedbythecity’sfullydevelopedfreewaynetwork.

Figure7.LikelyLand‐UseOutcomesWhenUrbanRailInvestmentsarePro‐activelyLeveraged

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6.RailwaysandUrbanizationinLatinAmerica Lessisknownaboutthecity‐shapingimpactsofrailwaysinthedevelopingworldingeneralandLatinAmericaspecifically,inlargepartbecausetherehavebeenfewsystematicstudiesonland‐useimpactstodate.Still,experiencesshowthatmetrosinSantiago,Chile,Caracas,MexicoCity,andSãoPaulo,Brazil,liketheirNorthAmericanandEuropeancounterparts,havelargelyencouragedregionaldecentralization(InstitutionofCivilEngineers,1990).Unlikeinthedevelopedworld,however,thereappearstobelessagglomerationimpactsincoreareasfollowingtheopeningofmetrosystems,althoughwithoutrailwayinvestments,theprimacyroleofcoreareaswouldhavebeenweakenedmorebyroadwayconstructionandrapidmotorization. InthecaseofSantiago,Figuero(1990)foundthatthemetrorelocatedpoortothemetropolitanperipherywhilemodernizingtheinnercity.Thispatternofsettlement,withtheaffluentlocatednearestthecitycentertheleastaffluentattheperiphery,typifiesmostLatinAmericancities.Similarly,byfocusingonthecentralcoreandservingcloserinneighborhoods,Caracas’smetrohascateredmoretoaffluentpopulationgroupsandlesstothepoor(Sperling,1981).Caracasmetro’sbiggestdevelopmentimpacthasbeentospawnurbanrenewalinthecity’smainvalley(Tobia,1989).Upzoningaroundcorestationsbylocalplanningofficialshelpedspurdensification.From1983to1989,morethan70%ofallnon‐residentialbuildingsconstructedwerewithinthe“areaofinfluence”ofCaracasMetro’sline1.Additionally,twopedestrianmallswerebuiltovertheundergroundsectionofline1andaretailplazawasbuiltundertheelevatedsectionofline2.Plazasandopenspaceshavealsobedesignedaroundvariousmetrostations,incorporatingtheworksofselectedVenezuelanartists. InLatinAmericaandelsewhereinthedevelopingworld,metroinvestmentshavelikelycontributedtosocialstratificationandinformalizationofhousing(Cervero,2001).Forthisreasonmetroshavebeencriticizedforfailingtoalleviatepovertyandspecificallyforbeingregressive,usingscarcegovernmentfinancialresourcesforpurposesthatbenefittherichfarmorethanthepoor.Metroslikelyallowformallanddevelopmenttodisplacethepoortoinformalsettlementsontheperiphery(e.g.,barriosandfavelas).Researchshowsthatthoseworkerslivingininformalhousingonthefringesspendasmuchasone‐quarterofdailyearningsontransportation,oftenintheformofpayingmultipleinformaltransitoperatorsforaccesstothecentralcity(CerveroandGolub,2007).Awelfareanalysisofinformalvansandsuburbanrailwaysservingthelow‐incomeneighborhoodofBaixadaFluminenseinRiodeJaneirofoundthatgivingpriorityto“formal”busandrailwayserviceswouldyieldnetbenefitstothepoorandrichalike(Golub,2003).Theinfluencesofinformal‐sectoractivitiesarefeltnotonlyinthefringesoflarge,rail‐servedLatinAmericancities,however.Theabsenceofofficeandhigh‐endcommercialdevelopmentnearcentralmetrostationsinMexicoCityhasbeenassociatedwiththenuisanceeffectsofinformalvendors,streetpeddlers,andvariousformsofillicitcommercialactivities(Cervero,2001).Theland‐developmentimpacts,andnotunrelatedly,theincomeredistributioneffectsofmetroinvestments,hasgainedincreasedpolicyattentioninrecentyears.Mostinternationalaidorganizationsanddevelopmentbankstodayconsidercontributionstopovertyalleviationasoneofmanyfactorsthatweighinthedecisiontoprovide

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loansforcapital‐intensiverailwayinvestments.7. LandValueImpactsandValueCaptureOpportunities Thedegreetowhichrailtransitinvestmentsyieldbenefitsisperhapsbestgaugedbytheimpactsonreal‐estatesalespricessurroundingrailstations.Theaccessibilitybenefitsconferredbypublicinfrastructureinvestmentsinrailwaysgetcapitalizedintohighervaluesforlandparcelsimmediatelysurroundingstations.Itisimportanttonote,however,thatunlessarailinvestmentcausesanetinflowofprivatecapitalandinvestmentintoaregion(thatotherwisewouldnothaveoccurredwithouttherailinvestment),thentheland‐valueimpactsarelargelypecuniaryandredistributive.(Somebenefitsmightaccruefromtheagglomerationeconomiesofrail‐permittedhigh‐risedevelopment,althoughthesearegenerallysmallrelativetonetgenerativeimpacts;seeCambridgeSystematics,etal.,1998).However,tothedegreethatarailinvestmentsignificantlyreducestrafficcongestionandconferstravel‐timesavingstoworkersandbusinesses,nearrailsystemsyieldrealeconomicbenefitsintheformofincreasedeconomicproductivity.Thisisthoughttorepresentthesituationofmanyrapidlyindustrializingeconomiesoftheworld,includingthoseinLatinAmerica.

Asignificantbodyofresearchdocumentstheland‐valuecapitalizationbenefitsofrailwayinvestmentsacrosstheworld(Huang,1996;CambridgeSystematics,etal.,1998;Dunphyetal.,2004).Significantgainslandpricesoccurinlargepartbecausethereisafinite,limitednumberofbenefittingpropertiesasaresultofarailwayimprovement.Forpremiumstoaccrue,itseemsimportantthattransitbeinaneighborhoodwithareasonablyhealthyreal‐estatemarketandfreefromsignsofstagnationordistress(Dunphyetal.,2004).Experiencesshowthatthegreatestincreasesinlandpricesoftenoccurbeforetheopeningofrailwayservicesaslandspeculatorsanticipatefuturepriceappreciation(Dammetal.,1980)andthatcapitalizationeffectsaregreatestinhighlycongested,lesscar‐dominantsettings(Cervero,1998).Land‐pricepremiumsalsotendtoincreaseduringperiodsofeconomicexpansion,formorematureandextensiverailwaynetworks(thattherebyresultinrailwaysprovidingcomparableaccessibilitybenefitstoauto‐highwaynetworks),andwherepro‐activegovernmentpoliciesandincentiveshelpleveragedevelopment(CerveroandDuncan,2002). Undertherightconditions,localgovernmentsstandtocapturesomeofthevalue‐addedproducedbypublicinvestmentinrailtransit,eitherindirectlythroughincreasedpropertytaxproceedsordirectlythroughprogramslikebenefitassessment,bettermenttaxes,ornegotiatedjointdevelopmentinitiatives(suchasequitypartnershipsbetweendevelopersandlocalgovernments).Theconceptofvaluecaptureasameanstofundorrecoverthecostofpublicinfrastructuregainedinterestwhenthesecond‐generationofurbanrailwayinvestmentsintheU.S.–e.g.,SanFranciscoBARTandWashingtonMetrorail–werebuilt,particularlyfollowingthe1978publicationofWindfallsforWipeouts:LandValueCaptureandCompensationbyHagmanandMisczynksi(Fogartyetal.,2008).Throughexaminingtheimpactsofpublicinvestmentsonlandvalues,HagmanandMiscyznski(1978)arguedthatwindfallstopropertyownersproducedbypublicinfrastructureinvestmentsshouldbecapturedbycities(orother

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publicagencies)throughtaxesandfeestiedtolandvalues.Tothedegreefairandequitableprogramscanbemounted,governmentshavealottogaininsharinginsomeoftheprofitsintroducedbynewtransitfacilities.Inparticular,revenuesgainedthroughvaluecapturecangotowardleveragingTOD.Municipalitiesmustoftentaketheleadinattractingprivatecapitaltorailstationareasby“sprucingup”theneighborhoodthroughimprovedlandscapingandurbandesign,byintroducingcomplementaryinfrastructureimprovements(likesidewalksandtheunder‐groundingofutilities),andinthecaseofriskiersettings,underwritingprivate‐sectorlandacquisitionscosts.Allofthistakesmoney,oftenlotsofit.Thus,valuecapturestandsasapotentialsourceofrevenuenotonlytohelppayoffthedebtontransitinvestmentsbutalsotopayforupfrontandancillaryneighborhoodimprovementsthatcanhelpleverageTOD. Valuecapturealsohasequityappeal.Why,thereasoninggoes,letahandfuloffortunatelandowners,orworseyet,realestatespeculators,reapthewindfallscreatedbypublicinvestmentsintransit?Returningthevalue‐addedtoretireconstructionbondscapturecanrelievecash‐strappedlocalgovernmentsoffiscalburdenswhilealsoreducinglandspeculationandcreatingamorecompact,transit‐orientedurbanform.Havingthetransitentitycontrolthelandaroundstations,moreover,increasesthechancethatmajortripgeneratorsandtransit‐orientedlanduses–suchasretailplazas,offices,andcivicuses–occupystrategicallyimportantlandparcels,therebyincreasingridershipandfareboxreturns. Athirdbenefitofvalue‐captureschemesistheycanmoderatelandspeculationaroundrailtransitstations.Withunregulatedlandmarketsandhighdemandforprivatedevelopmentinhighlyaccessiblelocations,landspeculatorsarelikelytobidupthepriceofrealestateinanticipationoffuturewindfalls.Frequentturnoveroflandownershipbetweenthetimearailinvestmentisannouncedandservicesactuallybeginoperatingcanleadtoanover‐heatedlocalrealestatemarket.Thiscannotonlyresultinartificiallyinflatedlandpricesthateventuallydeclinebutalsocancauseconsiderabledisplacements,particularlyoflower‐incomehouseholdsandsmallbusinesses.Tothedegreethatthepublicsectorco‐participatesintheland‐valueincreasesthatareproducedbypublicinvestmentsinrailways,themotivationtopurchaselandpurelyforspeculativepurposesofreapingwindfallprofitsistempered. Valuecaptureisnotwithoutlimitations,asoutlinedbyPeterson(2008).One,urbanlandmarketsarenotoriouslyvolatileandrecentgainsinpropertyvaluescouldreflectaland‐assetbubble.Thusrecapturingoverheatedpropertyvaluescouldmeanfuturedeclinesinrevenuesfollowingasharpeconomicdownturn.Two,landsalesoftenlacktransparencyandaccountability,sometimesconductedoff‐budgetthroughprivatenegotiationsandsometimesavictimofgraftandcorruption.Incompletelandregistriesandtitlingrecordscanalsocomplicateimplementation(CerveroandSusantono,1999).Lastly,governmentscanartificiallyinflatelandpricesthroughrestrictivezoningasarevenue‐producingploybutinsodoingdistortlocalreal‐estatemarkets.

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7.1 ValueCaptureMechanisms Landvalueincreasesinducedbyrailwayinvestmentsandoperationsyieldincomethataccruetothepublicsectorusuallyintheformofhigherpropertytaxproceeds.Thisindirectformofvaluecapture,however,cannotbecounteduponbyrailwaycompaniesandpublictransitoperatorssincepropertytaxproceedsusuallygotomunicipalcoffersandthusarenotdedicatedforthepurposesofpayingoffcapitaldebtincurredinbuildingrailways.Indirectpropertytaxgainsarethusanimperfectandundependableformofrail‐transitvaluecapture. Moredependablearevaluecapturestrategiesthattargetrevenuegainstospecificdistrictsorprojects.Thesegenerallyfallintofourcategories(Fogartyetal.,2008;Cerveroetal.,1991):

• SpecialAssessmentsandBettermentTaxes:Ataxassessedagainstparcelsthathavebeenidentifiedasreceivingdirectbenefitsfromrailwayinvestments;

• TaxIncrementFinancing:Amechanismthatallowsthepublicsectortosetasidethegrowthinpropertytax(orsometimessalestax)incomeresultingfromrailwayinvestmentsanddedicatetheincrementalincreaseinincomestohelppayforthecapitalinvestmentandancillaryactivities(e.g.,streetscapeenhancements);

• ImpactFees:Afeeassessedonnewdevelopmentorredevelopmentwithinadefineddistrictasameanstodefraythecostofexpandingandextendingtransitservicestotheaffectedproperties;

• JointDevelopment:Apublic‐privatepartnership(PPP)todelivertransit‐orienteddevelopment(TOD),usuallyinvolvingdevelopmentontransitagencyownedlandorairspaceandinvolvingeitherrevenue‐sharingorcost‐sharing.

SpecialAssessmentsandBettermentTaxesaremoreoftenusedtofundsewer,water,andsidewalkimprovementsthanrailwaysystems.IntheU.S.,benefitassessmentdistrictswereformedtoco‐financeancillaryimprovements(e.g.,undergroundingutilities,roadexpansion,streetscapeandsidewalkenhancements)forthe8‐kmRedLinesubwayinLosAngelesaswellasbus‐mallsinMinneapolis,Denver,andPortland,Oregon(Cerveroetal.,2004).InLosAngeles,assessmentsleviedoncommercialpropertiesinbuilt‐uprail‐servedcorridorshavegeneratedsome$180milliontodate.Additionally,around20%ofthecapitalcostsofbuildingPortland,Oregon’sdowntownstreetcarwaspaidbyspecialassessments(Fogartyetal.,2008).BettermenttaxeshavelongbeenusedinBogotá,Colombia,generatingmorethan$1billiontofinancestreetandbridgeimprovementsoverthe1997‐2007periodandaretodayunderconsiderationforfinancingBogotá’splannedundergroundmetro.Ratherthanestimateparcel‐by‐parcelgainsinland‐valueduetoindividualinvestmentproject,Bogotáfinancesacitywidebundleofpublicworksprojectsthatarebroadlydifferentiatedbybenefit

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zoneandotherfactors.Thecity’scelebratedTransMilenioBRTsystem,researchshows,haveproducedland‐valuepremiums(RodriquezandTarga,2004;RodriquezandMojica,2008)thusbackersofthemetrorailsystemcontendthatbettermenttaxesofpropertiesindistrictsdirectlyservedbyrailstationswillbeafairandefficientmeanstogeneratefunds.BettermenttaxesarealsooneofseveralfundingoptionsbeingconsideredforfinancingtheexpansionofBuenosAires’ssubwaynetwork.Assumingagoodlandregistryandproperty‐taxadministrativesystemisinplace,assessmentfinancingandbettermenttaxeshasconsiderablepotentialforhelpingtodefraythecapitalcostsofrailwayinvestmentsinthedevelopingworld,includingLatinAmerica. TaxIncrementFinancingdiffersfromassessmentfinancinginthatitfunnelsincrementalincreasesinproperty‐taxrevenuesbackintoadistricttohelprevitalizedistressedneighborhoods.Taxincrementfinancing(TIF)hasbeenusedextensivelytoencourageTODinmanypartsoftheUnitedStates,includingthecityofChicagowherehalfofthe129TIFdistrictscontainrailwaystations.ThestateofPennsylvaniaappliesTIFinTransitRevitalizationInvestmentDistricts(TRIDs)topromoteeconomicdevelopmentandTOD.AcriticismofTIFisitdivertstaxdollarsthatwouldotherwiseaccruetoacity‘sgeneraltreasuryandasthuscreatesaprivileged(i.e.,subsidized)zone.SuchequityconcernshavelimitedtheapplicationofTIFstomuchofthedevelopingworld. ImpactFeesareachargeassessedonnewdevelopmentasameanstodefraythecostofexpandingandextendedpublicservices.Whereasspecialassessmentandbettermentfinancingisappliedtoallpropertieswithinaneffecteddistrict,impactfeesarenormallypassedononlytonewcomers.In1981,thecityofSanFrancisco,CaliforniaintroducedaTransitImpactDevelopmentFee(TIDF)leviedagainstnewdowntownofficebuildingstoproduceincomeforoperatingandmaintainingthecity’sMUNItransitnetwork,comprisinglight‐rail,dieselbus,trolleybus,andcable‐carservices.TIDFrevenuesproducearound$10millionannually,usedonlyforoperationsvis‐à‐viscapitalexpansion.BrowardCounty,FloridahasaTransitOrientedConcurrencysystemthatsimilarlygeneratesincomefortransitoperationsbylevyingafixedfeeonnewdevelopment.Thisprogramcoversaround30%ofannualbus‐transitoperatingandcapitalcostsforthecounty(Fogartyetal.,2008).Becauselimitingimpactfeestonewdevelopmentonlycandeterinvestmentsinallbutthehealthiestreal‐estatemarketsandcaninflatethecostofhousing,ithasbeenappliedonalimitedbasisoutsideoftheUnitedStates.Inthedevelopingworld,exactionsaremorecommonwhereindeveloperscoverthecostofexpandinginfrastructure(e.g.,waterandsewertrunklinecapacities)toserveaspecificmaster‐plannedsite.Privatecontributionstiedtoland‐basedassessmentshaverecentlybeenusedtobuildandexpandconnectingroadsandbridgestomaster‐planneddevelopmentsinCairo,Egypt,MumbaiandBangalore,India,CapeTown,SouthAfrica,andIstanbul,Turkey(Peterson,2008). Jointdevelopmentisarguablytheformofvaluecapturemostapplicabletorailtransit.Underthisapproach,apublictransitagencypartnerswithaprivatedevelopertobuildareal‐estateprojectonlandorairrightsownedbythetransitagencyitself.Inreturn,thetransitagencyreceiveseitherrevenue(i.e.,revenuesharing)orpassesonpartorallofthecostsofrail‐stationandancillaryconstruction(i.e.,costsharing).Unlikeotherformsofvaluecapture,

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however,jointdevelopmentisavoluntaryarrangementbetweenpublicandprivateinterestsseeking“win‐win”outcomes(Cerveroetal.,1991).Amongthemostcommonformsofrevenue‐sharingschemesarelandleases,air‐rightsdevelopment,andstationinterfaceorconnection‐feeprograms.Cost‐sharingschemesincludesharingconstructionexpenses,incentive‐basedprogramsthatproducebenefitsforprivatefinancing(e.g.,densitybonuses),andjointuseofequipmentlikeventilationsystems.Asavaluecapturetoolfortransit,jointdevelopmenthasthemostappealinsettingswhereasignificantamountoflandisavailabletoatransitagency,preferablypurchasedontheopenmarketatafairlylowcost(whichusuallymeanspriortoformalannouncementofanewrailwayproject).Tothedegreejointdevelopmentislimitedtoageographicallyrestrictedarea,suchasoneortwosmallparcelsownedbyatransitagency,itfailstocapturevaluefromabroaderareabenefitingfromnewtransitservices.7.2 TransitJointDevelopmentasValueCapture Becausejointdevelopmentiscontrolledbyatransitagency,itistheformofvaluethathasthegreatestpotentialtofinancingrailinvestmentsinmuchoftheworld.Itrequires,however,aninstitutionalcapacitytoexpandbeyondthetraditionalmissionoftransitagencies–i.e.,buildingandoperatingtransitservices–andtoventureintootherentrepreneurialrealms,likevaluecapture.Thusinstitutionalreformsareoftenanecessarypartofanysuccessfultransitvaluecapturescheme. TheimportanceofbeingentrepreneurialisunderscoredbyexperiencesinWashington,D.C.Overthepasttwodecades,theWashingtonMetropolitanTransportationAuthority(WMATA)–whichdesigned,built,andtodayoperatestheregion’srailtransitandpublicbusservices–hasaggressivelysoughttorecapturevaluethroughjointdevelopmentactivities.WashingtonMetrorail’sjointdevelopmentprogramofair‐rightsleasesandstationconnectionfeesgeneratearound2%ofthesystem’sannualrevenueshoweverresearchshowstheincreasedridershipandthusfareboxintakeatleastdoublesthispercentage(Cerveroetal.,2004). Pro‐activismaccountsformuchofWMATA’sjointdevelopmentsuccess.WMATAisanindependentregionaltransportationauthoritythatoverseesrailandbusoperationsinafairlycomplexinstitutionalsetting:theDistrictofColumbiaandtwostates,VirginiaandMaryland,aregionwithover6millioninhabitants.AvitalstepinWMATApursuingvaluecapturewasthecreationofareal‐estatedevelopmentdepartmentwithintheagencyattheverybeginning,priortotheconstructionandopeningofrailwayservices.Byhiringseasonedreal‐estateprofessionalstostaffandmanagethisdepartment,WMATAwaswellpositionedtoseekoutremunerativejointdevelopmentpossibilities.Private‐sectorexperienceshelpedtocreateamoreentrepreneurialapproachtolanddevelopmentthanisfoundinmosttransitagencies.Importantlystaffmembersweregiventhefinancialresourcestopurchasedlandaroundplannedrailstationsontheopenmarket,oftenbeforeformalplanswereannouncedandthusatfairlyreasonableprices.Ratherthanwaitingandreactingtodeveloperproposals,WMATA’sreal‐estateofficeactivelysoughtoutmutuallyadvantageousjoint‐developmentopportunities.

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Withfinancialandinstitutionalsupportprovidedbyboardmembers,WMATA’sreal‐estateofficehasovertimeamassedanimpressiveportfoliooflandholdings,muchofitpurchasedontheopenmarketplaceandsomecomprisingformerfarmsteadsthatwerepurchasedafavorableprices.Todate,WMATAhadundertakenmorethanthirtydevelopmentprojectsatavalueofmorethan$2billiononlandtheagencyowns. Overtime,WMATAhasrefineditsjointdevelopmentactivities.Today,candidatestation‐areasitesarecarefullyscreenedaccordingtoasetofcriteriathatgaugedevelopmentpotential.Forsitesselected,aRequestforProposals(RfP)isissuedtosolicitdeveloperinterests.Throughnegotiations,adeveloperteamischosenandcontractsareenteredintospecifythefinancialtermsofthedeal.Withthehelpofaprivatereal‐estatefirm,WMATAnowratespotentialsitesaccordingtothelikelydegreeofprivate‐sectorinterestsanddevelopmentconstraints.WMATA‐ownedlandandairrightsgetreleasedtothedevelopmentmarketnotunlikeifitwereinthehandsofaprivate‐sectorconsortium. 7.3 GuidanceonValueCaptureandJointDevelopmentintheDevelopingWorld Jointdevelopmentinitiativeswherepublicandprivateinterestsvoluntarilyenterintoagreementsarelikelythebestformoftransitvaluecaptureinrapidlygrowingcitiesofthedevelopingworld.Presumably,bothpartieswhowillinglyenterintodealsperceivebenefitsfromco‐developingneartransitstations,thustransit’svalue‐addedintheseinstancesisindisputable. Successstoriesandmodeldemonstrationsareeffectivetoolsforadvancingandproliferatingtransitjointdevelopment.Internationalaidagenciesandlendinginstitutionscanseedsuchactivitiesbytyingloansandaidfornewrailwayinvestmentstojointdevelopmentrequirements,providingtest‐bedsforothertransitoperatorstoemulate. Steponeinpromptingacityorrailwayagencytoaggressivelypursuetransitjointdevelopmentisinstitutionalreforms.Notably,aswasthecasewithWMATAinWashington,D.C.,arailwayentityeligibleforexternalloansandfundingsupportshouldberequiredtocreateareal‐estatedevelopmentdivisionwithintheorganization.Thisismostlikelytooccurwhereasingletransitauthorityexists,aswasthecasewithWMATA.Thereal‐estatedevelopmentdepartmentshouldbestaffedwithindividualswithprivate‐sectorexperiencetocreateamoreentrepreneurialapproachtolanddevelopment.Creatingatown‐planningandurbandesigndepartmenttoensurejointdevelopmentprojectsareofahighqualityandpedestrian‐friendly,andarearchitecturallyintegrated,canbeanotherkeyinstitutionalreform,asdiscussedlaterwiththecaseofHongKong. Withareal‐estatedevelopmentteaminplace,financialresourcesthenneedtobeprovidedfortheagencytopurchaseandamasslandparcelsaroundplannedrailstops.Ideallythisisdoneearlyintheprocesswhenlandvaluesarefairlylow,suchasattheterminusesofplannedlinesthatextendtoexistingagriculturalland.Onceaportfolioofrealestateexists,areputablereal‐estateconsultingfirmshouldbehiredtoscanandassessthedevelopment

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potentialofagency‐ownedland,usingcostproformasandothertried‐and‐trueassessmenttools.Afterparcelsandairrightsarerankedandassessedaccordingtotheirdevelopmentpotential,thetransitagencyshouldthenissueRfPstosolicitprivatedeveloperinterest.Itisimportantthatotherstakeholders–notablyplannersanddecision‐makersoftheaffectedmunicipaljurisdiction–areinvolvedintheprocesstoensuresupportivezoningandland‐useregulationsareinplaceandthatanyjointdevelopmentschemecontributestolargercommunitygoals,suchascreatingpedestrian‐friendlyTODs. Oncedevelopmentpartnersandjointdevelopmentschemesareselectedforhigh‐prioritysites,thetransitagencyneedstomonitorprojectconstructionanddevelopmentoutcomestoensurecompliancewiththetermsofadeveloperagreement.Overtime,adjustmentsneedtobemadetoensurejointdevelopmentschemesapportionrevenuesandexpensesfairlyamongpartnersandallowforsteady,dependablerevenuestreams.Itmightalsobepossibletoone‐dayreplaceRFPsforindividualsiteswithamasterdevelopmentagreementwhereinadevelopmentteamhasaccesstomultipledevelopmentsitesalongarailwaycorridor.ThisprovidesgreaterflexibilityinphasinginTODsaccordingtoshiftsinbusinesscyclesandreal‐estatemarketconditions.SeveralU.S.cities,notablyDallas,Texas,Raleigh,NorthCarolina,andDenver,Colorado,arecurrentlyexploringsuchmasterdevelopmentagreementoptionsaspartofplannedrail‐transitextensions. Whileexperienceswithtransitjointdevelopmentarelargelylimitedtothedevelopedworld,theseriesofstepsandguidelinesoutlinedaboveareapplicableinanysetting,includingLatinAmerica.Theprinciplesofvaluecaptureandjointdevelopmentarepureandwidelyembracedbylandeconomistsbasedonasolidtheoreticalfoundation.Actingontheseprinciplesrequiresbothapoliticalwillandinstitutionalcapacity.InternationalaidagenciesandlendinginstitutionsarelikelythebestagentstoprodlocalgovernmentstoputinplacerailtransitagenciesthatcancarryoutthepracticesofWMATAandotherentrepreneurialentities.

8. ValueCapture:ExperiencesinTokyoandHongKong Themostnotablecontemporaryexamplesofprivaterailwayconstructionofthemajorityofurbanraillines,notjustextensions(ashasbeenthecaseinLatinAmerica),comefromtwoofeastAsia’seconomicjuggernauts:HongKongandTokyo.IncontrasttotheexperiencesofWMATAandotheragenciesinrecapturingvaluethroughjointdevelopment,specialassessments,andotherschemes,inbothofthesecitiestherailwayagencypracticedlanddevelopmentitself.Whatdistinguishesbothcasesisprivaterailwaycompanies’relianceonpropertydevelopmenttodirectlygenerateprofits(vis‐à‐visindirectlyrecapturingvaluethroughdealswithprivatelanddevelopers).InHongKong,aprivatecorporationhasassumedtheroleofbuildingthecity’smodernurbanrailsystems,relyingmainlyonreturnsfromancillarylanddevelopmenttocoverconstructionanddevelopmentcosts.MetropolitanTokyohasanevenlongerhistoryofprivaterailwayconstruction.Overthepasthalfcentury,privaterailwaycorporationshaveconstructednewtownsaroundrailwaystationsthroughoutthesuburbsofTokyo,exploitingtheland‐valuegainsinandaroundrailwaystationsconferredby

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improvedaccessibility.8.1 Tokyo’sPrivateRailways Tokyo’srailwaynetwork–ownedandoperatedbyamixofpublic,privateandquasi‐privateentities–is,byfar,theworld’slargest.Mostoftheregion’sextensivenetworkofsuburbanrailwaylineswasbuiltbyprivatecompanieswhoreceivedgovernmentconcessionsandexclusiverightstodesign,build,andoperaterailservices.Tokyo’srailwaycompanieshavehistoricallyleveragedreal‐estatedevelopmenttobothpayforinfrastructureandproduceprofitsforshare‐holders.Andtheyhavesimilarlyopenedconveniencestoresandshoppingmallswithinandadjacenttostations. WhatmostdistinguishesTokyo’srailwaycompanies,however,istheirconstructionofnotjustahandfulofbuildingsbutalsoveritablenewtownsononcevirginlands(Cervero,1998).WestofcentralTokyo,wheremanyoftheregion’smostup‐marketsuburbsarelocated,entirecommunitiesaretodaythedomainsofpowerfulconglomeratesthatarebestknownfortheirdepartmentstorechains–Tokyu,Odakyu,Keio,andSeibu–butwhichfirstandforemostareinthebusinessofrailwayandreal‐estatedevelopment.Allstartedasprivaterailwaycompaniesandovertimebranchedintobusinessescloselyrelatedtotherailwayindustry,includingrealestate,retailing,busoperations,andelectricpowergeneration.Suchbusinessexpansionmadeperfectlygoodeconomicsense.Placingshoppingmalls,apartments,andentertainmentcomplexesnearstationsgeneratedrailtraffic;inturn,railwaysbroughtcustomerstotheseestablishments.Duringthe1980sattheheightofrailway/new‐townco‐developmentandasurgeinJapanesereal‐estateprices,railwaycompanieswereearninginvestmentreturnsonancillaryreal‐estateprojectsintherangeof50%to70%,withprofitmarginsfromrealestatefaroutstrippingthosefromtransitservices(Figure8). The1990sandonwardshavemarkedaneweraforTokyo’sprivaterailwaycompanies.Forone,theburstofJapan’sreal‐estatepricebubblesawthemarketvaluationsofrailcompanies’land‐holdingsfall.Additionally,powerfuldemographictrendslikedecliningbirthratesandanagingpopulation,combinedwithaslowingoftheeconomy,reducedthedemandfornew‐townconstruction.Tospreadtherisksofashakierreal‐estatemarket,privaterailwaycompanieshaveinrecentyearspartneredwiththirdpartiestopursuelarge‐scaledevelopmentprojects.Theredevelopmentandinfillingofstrategiccentral‐citylandparcelsisalsobeingpursuedbyTokyo’stwoformerpublicrailways,JREastandTokyoMetro.JREast’sshowcasereal‐estateprojectisTokyoStationCity,jointlydevelopedbytherailwaycompanyandprivateinterests.TokyoStationCityfeatureshigh‐rise,class‐Aofficebuildings,retailcenters,andhotels.Tokyostationiswell‐suitedforlarge‐scaleredevelopmentowingtolargeamountsofbuildablespaceabovedepotsaswellashighpedestriantrafficvolumes.Onatypicalweekdayin2005,aroundahalf‐millionpassengerspassedthroughTokyostationeachday.

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Figure8.RatesofReturnbyPrivateRailwayCorporationsinMetropolitanTokyo,1980‐1996.Source:Cervero(1998)

8.2 HongKong:ValueCaptureandPlace‐Making

HongKongisoneofthefewplacesintheworldwherepublictransportmakesaprofit,courtesyofthecity’srailoperator–MTRC–pursuingwhatiscalledthe“Rail+Property”program,orR+Pforshort(CerveroandMurakami,2008).R+Pisoneofthebestexamplesanywhereoftransitvaluecaptureinaction.Giventhehighpremiumplacedonaccesstofast,efficientandreliablepublic‐transportservicesinadense,congestedcitylikeHongKong,thepriceoflandnearrailwaystationsisgenerallyhigherthanelsewhere,sometimesbyseveralordersofmagnitude.MTRChasuseditsabilitytopurchasethedevelopmentrightsforlandaroundstationstorecoupthecostofinvestinginrailtransitandturnaprofit.Therailwayhasalsoplayedavitalcity‐shapingrole.In2002,around2.8millionpeople,or41%ofHongKong’spopulation,livedwithin500mofarailwaystation(Tangetal.,2004). ProfitmotiveaccountsforMTRC’sactiveinvolvementinlanddevelopment.AsaprivatecorporationthatsellssharesontheHongKongstockmarket,MTRCoperatesoncommercialprinciples,financingandoperatingrailwayservicesthatareself‐supportingandyieldanetreturnoninvestment.Effectively,thefully‐loadedcostsofpublic‐transportinvestments,operations,andmaintenancearecoveredbysupplementingfareandotherrevenueswithincomefromancillaryrealestatedevelopment–e.g.,thesaleofdevelopmentrights,jointventuringwithprivatereal‐estatedevelopers,andrunningretailoutletsinandaroundsubway

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stations.HongKong’sgovernmentisMTRC’smajoritystockholder,ensuringthecompanyweighsthebroaderpublicinterestinitsday‐to‐daydecisions.However,thesaleof23%ofMTRC’ssharestoprivateinvestorsexertsamarketdiscipline,promptingthecompanytobeentrepreneurial.Duringthe2001‐2005period,propertydevelopmentproduced52percentofMTRC’srevenues.Bycontrast,railwayincome,madeupmostlyoffareboxreceipts,generated28percentoftotalincome.MTRC’sinvolvementinallproperty‐relatedactivities–i.e.,development,investment,andmanagement–produced62percentoftotalincome,morethantwiceasmuchasuserfares.AnexampleofanMTRCR+Pprojectthathasyieldedbothhighratesoffinancialreturnsandhighridership(andthusfareboxincome)isMaritimeSquareattheTsingYiStation(Figure9). HongKonghaslonghadtalltowersperchedaboverailwaystations,howeverdensityalonedoesnotmakeagoodTOD.Whatwasoftenmissingwasahigh‐qualitypedestrianenvironmentandasenseofplace.MostfirstgenerationR+Pprojectsfeaturedindistinguishableapartmenttowersthatfunneledpedestrianontobusystreetsandleftittotheirowndevicestofindawaytoasubwayentrance.Growingdiscontentoversterilestation‐areaenvironmentsandsaggingreal‐estatemarketperformanceofolderbuildingspromptedMTRCtopaymoreattentiontoprinciplesofgoodtownplanning.In2000MTRCcreatedatown‐planningdivisionwithinthecorporationtopursueland‐developmentstrategiesthatmetcorporatefinancialobjectiveswhilealsoenhancingstation‐areaenvironments.Priortothis,R+Pprojectsfollowedratherthananticipateddevelopment.Withanin‐housetownplanningdepartment,MTRCbecamemorepro‐active.Thishastakentheformofthecompanybeingaheadofmarketdemand,buildinghigh‐quality,pedestrian‐friendlyTODstosteergrowth.Researchshowsthedesignofhigh‐qualitywalkingenvironmentshasyieldedevenhigherfinancialreturnspersquaremeterforR+Pprojects(CerveroandMurakami,2009).InHongKong,pedestrian‐friendlyR+Pprojectshavecontributedtosustainableurbanismaswellassustainablefinance.Thesebenefitshavebeencapitalizedintolandprices.9.Conclusion Globalexperiencesshowthatundertherightconditions,railtransitinvestmentscanproducesignificantland‐usechangesaroundrailtransitstations.Besidessuchexternal,orexogenous,forcesasregionaleconomicgrowth,increasingmotorization,andworseningtrafficcongestion,internal,orendogenous,factorsalsoinfluenceoutcomes.Amongthepolicyleversthatshapetheformandtypeofstation‐areadevelopmentthatgovernmentofficialshaveattheirdisposalare:permissiveandincentive‐basedzoningaroundstations;co‐financing,suchasthecreationofbenefitassessmentdistrictstogenerateincomefromlandappreciation;theabilitytotargetsupportiveinfrastructureandpublicinvestmentsaroundstationareas;andtheabilitytoassembleandpurchaselandtosupporttosupportplannedreal‐estateprojects.

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Figure9.HongKongMTR’sMaritimeSquareResidential‐RetailDevelopment.SituatedabovetheTsingYiStationbetweencentralHongKongandthenewinternationalairport,MaritimeSquarefeatureshierarchicallyintegrateduses.Shoppingmallextendsfromthegroundfloortothe3rdlevel.Stationconcoursesitsonthe1stfloor,withraillinesandplatformsaboveandancillary/logisticalfunctions(likepublictransport/businterchangeandparking)atorbelow.Abovethe4thand5thfloorresidentialparkingliesapodiumgardenandabovethis,high‐rise,luxuryresidentialtowers. Whilemarketforcespowerfullyshapeland‐useoutcomes,experiencesfromScandinaviancitieslikeCopenhagenandStockholmrevealthatacogentregionalvisionhelpsconsiderablyinensuringthatrailwayinvestmentsproducedesiredurban‐formoutcomes.Experiencesfromtheseandothercitiessuggestthatstation‐areaplanningneedstobecarriedoutselectivelyandjudiciously.Inmanysettings,andthiscertainlypertainstoLatinAmerica,planningeffortsshouldbedevotedtodevelopingorredevelopingahandfulofrailstations,atmost.Thisallowsresourcestobeeffectivelyconcentratedandincreasestheoddsofa“win‐win”arrangementwhereinbothpublicandprivateinterestscanco‐participateinthebenefitsconferredbynewrailinvestments.Demonstratingthatpositiveland‐usechangesarepossible

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inconjunctionwitharailinvestmentisimportantforproducinggood“models”thatthelargerdevelopmentcommunitycanemulateaswellasconvincingbanksandlendersthatinvestinginstation‐areaprojectscanbefinanciallyremunerative. Whethertransit‐orienteddevelopmentyieldsnetsocietalbenefitsisoftenrevealedbyland‐priceimpacts.Accessibilitybenefitsconferredbyrailwayinvestmentsgetcapitalizedintolandvalues,presentingrailwayinvestorswithtremendousopportunitiestorecapturesomeofthevaluecreatedbytheinvestment,atleastasasupplementtofareboxincomeandotherrevenuesources.Asreviewedinthispaper,east‐AsiancitieslikeTokyoandHongKonghavebeenparticularlymostaggressiveatrecapturingvaluethroughancillarylanddevelopmentinandaroundrailstations.There,thelogicisvaluecaptureandjointdevelopmentnotonlygenerateincometohelpretirerail‐capitalinvestmentbondsandfinanceoperations,buttheyalsocreatemarketdemandthatensureshigh‐ridershipservices.HongKong’sversionofpublic‐privatepartnershipisnotaboutoff‐loadingthecostofbuildingrailwaystotheprivatesector.Rather,itisabout“co‐development”–eachsectorbringinganaturaladvantagetothetable(e.g.,landacquisitionpowersinthecaseofthepublicsector;accesstoequitycapitalinthecaseoftheprivatesector).Theresulting“win‐win”situationnotonlyleadstofinanciallyviableinvestments,butalsoanintimateconnectionbetweenrailsystemsandnearbyreal‐estatedevelopmentthatattractstenants,newinvestors,andtransitriders. LatinAmericancitiesarewell‐positionedtolearnfrominternationalexperienceswithrail‐inducedland‐usechanges.Importantly,manyhavethekindsofpre‐requisitesneededifrailwayinvestmentsaretotriggermeaningfulland‐usechanges,includingrapidgrowth,risingrealincomes,increasedmotorizationandcongestionlevels,andthestrengtheningofgovernment’scapacitytoenterintoconstructivejointdevelopmentdealswiththeprivatesector.Indeed,LatinAmericahasbeenagloballeaderindrawinginprivatecapitaltohelpfinancerailwayconstruction,generallywithgoodresults.InBuenosAiresandRiodeJaneiro,privatefinancingandconstructionofmetroextensionswereaccompaniedbyincreasedridershipproductivityandlowerinvestmentcostswithoutanoticeabledeclineinservicequality(Estacheetal.,1999;Zegras,2004).HoweverLatinAmericancitieshaveyettomoveinthedirectionofcitieslikeTokyoandHongKonginengagingprivateinvestorstoco‐financecapitalinvestmentsthroughancillarylanddevelopment.SuchvaluecaptureinitiativescouldgoalongwaytowardputtingLatinAmericancitiesonmoresustainablepathways–intermsofbothfacilityfinancingandfuturepatternsofurbandevelopment.

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