More than development. Norwalk redevelopment.

Transit’s ROI

Times are lean.  GDP growth is barely positive.  Job growth is insufficient to recover the millions lost in 2008-09.  And the stock market is so volatile that people are settling for the microscopic returns offered by the very treasury bonds that Standard and Poors recently downgraded, or abandoning markets altogether and just stocking up on gold.

So where’s a guy to go to get a decent return on investment these days?

Well, if you’re a city, transportation investments would seem pretty hard to beat.  In a growing list of examples I come across, transportation investments in general, and transit investments in specific seem to offer the security of t-bills and the return of a high-octane hedge fund.  By “return,” what I mean is that the value of property nearest to transit investments increases so significantly, that the added tax revenue pays for the cost of the transit investment several times over in relatively short order.

The first example I saw of this was in a presentation on the Portland Streetcar by its executive director.  Not long after that, I saw  a presentation on the development of Arlington, VA’s metro lines.  In the case of the former, the presentation showed a $100 million outlay for the capital cost of its streetcar system.  No small sum, to be sure.  But the private sector response to that investment was $3.5 billion into the property along the streetcar line, what you might call a 3,500% return on the city’s investment.  (Of course the city doesn’t get the investment itself — only the taxes.  But, if the mill rate’s anything close to ours in Norwalk, Portland would still recoup most of their capital outlay just in the first year of revenue off the $3.5 billion.)  While not as direct or monetized as the Portland example, Arlington’s case showed a private sector response of a tripling of their office space and a quadrupling of their residential units.  Does it need to be a “fixed guideway” system, i.e., a streetcar, train, or subway?  Not necessarily.  The Cleveland Plain Dealer reported that their Healthline BRT (Bus Rapid Transit) system generated $4.3 Billion in projects for a $200 Million investment.

There are more examples.  And some pretty interesting academic literature on the phenomenon as well (since, not for nothing, but in addition to real estate transactions, transit investment also creates investment in the manufacture of transit vehicles — and produces associated jobs).  Reconnecting America has a brochure called “TOD 101” from which this page is taken.  High ROIs, right down the list…including in Kenosha, WI, a town not much larger than Norwalk.

The question it all begs for me is, given the “if-you-build-it-they-will-come” lesson from all these examples, if we want to develop downtown, why wait to invest in transit?