Transit: Cashing In on Enhanced Value

A growing demand for transit is forcing municipalities and transit authorities to find some way to increase its funding. But they are avoiding a lucrative financing model that's staring them in the face. The old days are over and the village of Vancouver has grown into a large urban centre. So old prejudices – such as, that public transit means lower class – should be dropped. As a region grows more crowded, transit doesn’t devalue the neighbourhoods it stops in: it enhances the area’s value.

By Tony Wanless / April 20, 2012

A growing demand for transit is forcing municipalities and transit authorities to find some way to increase its funding. But they are avoiding a lucrative financing model that’s staring them in the face.

The old days are over and the village of Vancouver has grown into a large urban centre. So old prejudices – such as, that public transit means lower class – should be dropped. As a region grows more crowded, transit doesn’t devalue the neighbourhoods it stops in: it enhances the area’s value.

It also provides buckets of money to municipalities along a transit route, whether SkyTrain or Canada Line, or, presumably, the planned Everdream – oops, Evergreen – Line, if it is ever built. Major rapid bus routes also create this transit benefit as increasing numbers of people abandon their cars and use the faster transit systems to get around.

Developers of housing and commercial buildings know this; they’ve recognized for some time that land around any new transit site is immediately ripe for development and therefore of more value.

Builders at a recent real-estate conference said as much when they predicted that almost all development that would occur in the region in the near future would be around transit stations. They’re in the business, so they’re highly attuned to trends.

But despite a long history of recommendations that this windfall be used to fund public transit, some municipalities that govern the transit system aren’t quite sure yet. They’re not too keen on sharing the value increases that go with transit.

Even TransLink is reluctant to access this flow of funds. TransLink CEO Ian Jarvis recently said that they are considering levying an “area-benefiting tax” on property owners near transit stations, but they worry that it would arbitrarily create two classes of property owners. So instead, it has been selling off any land it owns near stations.

Similarly, many other municipal representatives have raised other reasons why a special tax on areas around transit stations can’t be done.

But, come on folks, try to be a little more creative here. Certainly the transit system is a kind of black hole for funding and demands are always increasing. But that’s no reason to cut back service or ignore it completely.

The reality is that transit is a magnet for commercial development because it makes it easy for customers to get to locations along the transit routes. Maybe it wasn’t 30 years ago, but certainly it is now. People swarm to transit so they can get to locations like Burnaby’s Metrotown. Similarly, it’s a magnet for housing development because it makes it easier for people to get to work.

Why not cash in on that?