Christopher B. Leinberger

Could developers fund transit?

Urban land use strategist and Developer, May 12, 10.

Tagged with urban planning, transit, smart growth, urbanism, new urbanism, walkability, public transportation, leinberger

While houses are (mostly) sturdy, the construction industry is as sensitive as a 19th-century debutante. At the first sign of trouble, it swoons, often knocking the economy down with it. In each of the three recessions before the Great Recession, the economy shrank by less than 2 percent—but housing starts, on average, declined by a third. In the years leading up to the 1990 recession, when real estate bankrupted about half of the savings-and-loans, housing starts fell 44 percent. Usually, an economic recession means a depression in the housing industry.
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Housing is such a large part of the economy that a sustained, robust recovery is difficult to imagine without a corresponding recovery in the building, buying, and selling of houses. Indeed, housing has usually helped lead us out of prior recessions. While home buying typically plunges when the economy turns south, life goes on. People continue to age, children leave the nest, couples marry, babies are born, new jobs are taken. When consumer confidence returns, the pent-up demand for different housing choices sparks a boom in construction and renovation. The economic expansion during the 1990s, for instance, was fueled in part by a 44 percent rise in housing starts from 1991 to 1994, providing substantial job growth early in the recovery.

But this time may be different. As Zillow’s satellite maps begin to indicate, what we face today is not just a cyclical housing problem, but a structural one as well. Over the past decade, most house building occurred on the suburban fringe, in large part because that’s where houses could be built most easily and quickly. But now that the bubble has popped, we can clearly see that underlying demand in these areas is extremely weak, and oversupply is massive.
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Urban-style housing in walkable neighborhoods—including those in the inner suburbs—is what’s in demand today. And for a variety of reasons, that demand will intensify in the coming years. Only by serving it can the country kick-start growth in an enormous and essential part of the economy.

Yet the creation of new, attractive urban spaces is slow and difficult, and becomes all but impossible without substantial new infrastructure. Most of all, it relies on good transit options—especially rail links—around which walkable neighborhoods can develop. Rail, biking, and walking infrastructure is the backbone of urban development, and as a country we’ve for the most part neglected to build it in recent decades, in favor of new roads for new suburbs farther and farther away from metropolitan hubs. To support growth in the next decade, we need to change that dynamic—and nourish our walkable urban spaces and neighborhoods. Complicating matters, in these cash-strapped times we need to find a way to do so on the cheap.
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Urban spaces of the kind that people want today feature mixed-use zoning and lots of stores and parks within walking distance. But most of all, they feature good public-transit options—usually rail lines.

Metropolitan voters in recent years have passed roughly two-thirds of all ballot measures calling for tax increases to pay for new or expanded transit. But asking cities and suburban towns, which are now strapped for cash, to shoulder the entire burden of rail-transit investment is not realistic. And in a variety of ways, federal funds have typically privileged road building over public transit. Progress will be slow unless something changes.

This problem has a solution, one that could be borrowed from U.S. history, and that might help our economy get up more quickly off its knees: What if developers and property owners build the transportation infrastructure themselves?
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The encouragement of additional walkable urban development, which all starts with public transit, would have many benefits. Although building the infrastructure that supports dense development seems expensive, in the long run it’s actually much cheaper than conventional suburban infrastructure—at most one-tenth the cost per home. A mile of sewer line costs about the same to build whether it is on the metropolitan fringe or in a densely built inner suburb, but the line serves many more people in the inner suburb. And households in walkable urban areas use considerably less energy, in some instances at least a third less. High-density living even appears to spur faster rates of innovation; in a knowledge economy, ideas come faster and can be developed more quickly when more people can meet and mix easily.

But most immediately, investment in rail, bike, and walking infrastructure, laying the groundwork for developing the kind of housing that is now in demand, is essential if we want to restore the economy to health. In the mid-to-late 20th century, the growth of the suburbs propelled America’s economy. Growth of walkable neighborhoods in cities and suburbs can play a similar role in the decades to come, sparking growth in the broader economy—but only if we start preparing today.

Full story: Here Comes the Neighborhood
Source: The Atlantic Magazine, June 2010

Related Articles:
Houston Chronicle: Should developers be paying For mass transit?
Washington Post: Commercial property owners may be asked to pay for part of streetcar costs
Next American City: Transit as a development tool, but in whose interest?

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