How to Do Streetcars Right: Upzoning and Value Capture

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When the public invests in a nice streetcar line in a city, they create some wealth. Who gets that? Riders? Taxpayers? Nearby landowners? Existing tenants or future tenants of nearby buildings?

I think the worst possible thing you could do is let nearby landowners capture all of that wealth as a windfall in their property value. You really need to disperse that wealth across more people. One way to do that is to upzone the land around transit stations, so that many more people and businesses can have useful access to transit. Another way is to tax away the property value windfall via land taxes, and use the revenue for operations, to keep fares low.

I think those are the best known ways to address the concerns raised by Eric Jaffe’s sources about the ability of streetcars, and transit investments generally, to deliver growth and development in an equitable way:

Often that justification is economic development. Here, too, streetcars are no automatic fix. As Yonah Freemark has pointed out, cities often forget that streetcars won’t lead to transit-oriented development if zoning doesn’t permit mixed-use density in the corridor. Portland’s streetcar corridors have experienced a boom because they did just that. Other places, like St. Louis, have overlooked the role of zoning in streetcar development, according to Freemark:

In places where regulations make building large, mixed-use buildings difficult, transportation projects that will not do much to improve mobility will be incapable of encouraging much construction either.

Even where strong development does occur, cities must be mindful of the transformation they’re encouraging. The H Street corridor in Washington, D.C., for instance, exploded with businesses following streetscape improvements made in advance of the streetcar (which, of course, could have been made for buses). But as wealth gathers near the tracks, cities must consider how to keep the corridor affordable to the residents whose lives the line was supposed to enhance in the first place.

This entry was posted in Miscellany.

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