One of the many advantages of urban density is that it makes public transit more efficient and affordable for municipalities–the more people live near train or bus stations, the more likely they are to use them, rather than cars, to travel to work. (This, in addition to the greater “walkability” of cities, makes urbanization a particularly “green” policy).
Living (and owning property) near a public transit station is thus an attractive proposition. But public transit produces an “amenity effect” that increases property values and drives out those who benefit most from public transit: lower-income residents. This is the problem Denver, Colorado faces. Almost 30% of new housing in the region is within half a mile of a light rail station, but 70% of market-rate housing residents used a car to commute. For comparison, two-thirds of low-income residents used public transit.
This is bad from the perspective of the transit agency, too. Higher-income residents are more likely to use a car for transportation, so expansion boosts property values for folks who are less likely to use public transportation in the first place.
Writing for TransitCenter, Eleni Bardaka and John Hersey describe this transportation policy paradox well:
Therein lies the rub. Without equitable planning and policies in place, major transit investment can generate new demand for development in areas that quickly transition from economic afterthoughts to high-end enclaves of housing, retail, and offices catering to higher-income earners while leaving behind low-income households who could most benefit from improved transit access. Transit agencies may then find themselves the victims of their own expansion, setting in motion a speculative real estate market that delivers high-rent land uses but few new transit riders.
This is a double-barrelled case of rent-seeking by homeowners. Property owners have a strong incentive to keep new development out of their neighborhoods to restrict competition and drive up rents. This same financial incentive means they have a strong incentive to lobby for public transit, as officials from Fairfax County, VA did when WMATA was planning the silver line.
The solution seems obvious: conditionalize public transit expansion on increased housing density. Increasing the supply would, on top of bringing down rents more generally, make it cheaper for commuters to live near public transit and give mass-transit agencies new customers to provide revenue. This is part of Alex Armlovich’s “grand bargain” to address New York’s housing and transit problems in one move by providing incentives to relax zoning regulations near subway stops. He estimates that this plan would create 411,000 new housing units over 10 years and provide the NYC MTA with an additional $54 billion in revenue over the same period.
Urban density makes public transit more fiscally sustainable, but incentives for rent-seeking by property developers threaten to capture the process to the detriment of everyone else. Those who are pro-public transit should recognize this, and ensure that new transit projects are designed along the lines of a “grand bargain” to make housing more affordable for those who use public transit as intended, not as a boost to their property values.