Great Mass Transit Doesn't Have to Cost a Fortune

[M II A II R II K]

Great Mass Transit Doesn't Have to Cost a Fortune


Nov. 12 2013

By Matthew Yglesias

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Read More: http://www.slate.com/blogs/moneybox/2013/11/12/hong_kong_mtr_costs_great_transit_at_low_cost.html


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MTR does things other than Hong Kong transportation operations, but their Hong Kong transportation division spent 7.82 billion Hong Kong dollars in 2012. By contrast, the Washington Metrpolitan Area Transit Authority had $2.13 billion in 2012 operating expenses. At the current exchange rate of 7.75 Hong Kong dollars per U.S. dollar, that means MTR is spending less than one-half of what WMATA spends.

- Now, of course there's nothing wrong, per se, with spending a lot of money on your city's transportation system in order to obtain better transportation. But if you compare the level of service MTR delivers to Hong Kong with what WMATA delivers for D.C., I think you'd find it hard to make the case that what we're getting is twice as good. MTR has excellent train frequencies, about the same number of train stations, and over five times as many riders as WMATA. The only downside is that MTR's operating hours are a bit more restrictive than WMATA's. Beyond that, they're spending less money and delivering a better service—a valuable reminder that cost effectiveness counts for something.

- I've heard it said by U.S.-based transit activists that the success of MTR in providing a high level of service without ongoing operating subsidies is attributable to the fact that the company is also a substantial real estate developer and landlord around rail stations. It's true that they do those things, but it's simply not the case that landlording is subsidizing the transportation operations—the transportation is profitable on its own terms.

- Conversely, I've heard it said by U.S.-based conservatives that the success of MTR is due to it being a private for-profit firm rather than a government agency. But while it's true that MTR is company listed on the Hang Seng Stock Exchange, it's also true that over 70 percent of the shares in the company are still held by the Hong Kong government.

- MTR is cost-effective because the Hong Kong government demands cost-effective transit. Conversely, I bet MTR isn't nearly as good a place to work as WMATA or other American transit agencies for rank-and-file employees. But whatever the case may be about this, whatever MTR is doing with its workforce isn't undermining its ability to hire enough people to run an effective transit system.

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[ardecila]

Landlord activities don't just bring in revenue. They place hundreds of thousands of apartments and potential riders right at the doorstep of each station. In Hong Kong, this is pretty much the only development pattern. It wouldn't surprise me if Hong Kong turns an operational profit.

Many dense neighborhoods exist at a remove from rail stations and are served by connecting buses, but it's still massively transit-oriented. Due to an extreme scarcity of land, there is no auto-oriented sprawl. Highways exist but they're woven into the city and are not a primary means of transportation for most residents; even discounting traffic congestion, it's simply too difficult to find parking near homes, workplaces, and shopping/recreational areas.

[Swede]

The MTR business model is IMO just a continuation and/or an updated version of the business model used by the companies that owned, operated and expanded the NYC el-trains and the London Underground systems. In a way it reminds me of how Stockholm's subway was built too, but that was done by a company owned by the City in cooperation with the city's planning department (result: modernist TOD enclaves stretching over a Swedish mile out from the edge of the urban core).

[M II A II R II K]

Real Estate development and transit expansion are inter-related, and transit could be in that business and make it's own money.

As opposed to having to beg for funding and be beholden to wear politicians deciding where lines go and in what order, and then the real estate business show up after the fact and take advantage of the new extensions.

[Mr Downtown]

^It didn't end all that well in Silver Spring or LA.

For some reason, transit agencies (and governments in general) seem to be rubbish at timing the real estate market. So they always seem to miss the boom and sell at panic prices during a downturn. They also have no ability to withstand NIMBY pressures. Around both BART and WMATA systems, and also in Portland, bold plans to densify the areas around new stations have run into the buzzsaw of neighborhood opposition.

[Crawford]

MTR makes so much money because they own all the super-valuable real estate around the stations. Not really a good example for other cities.

And Hong Kong is just different. It's hyper-capitalist. No way are you going to build subways in Europe or North America using their tactics. They didn't even have a minimum wage until like a year ago, and it's currently something like $3.50 USD or something.

The primary cost with transit is salary/benefits. That's pretty much all you need to know.

[M II A II R II K]

Another form of government funding could be to award undeveloped patches of land to the transit agency so whenever a developer comes along and builds something when the timing is good, then the transit agency can still own the land it's on and receive perpetual lease payments from them.

[ssiguy]

Although transit agencies should certainly look at all available funding options including TOD developments, Hong Kong is a very unique situation and not applicable to nearly any other city in the world.

Hong Kong is HYPER dense with no real suburbs like you find in most wealthy nations. It probably the most expensive city in terms of real estate in the world so any land the agency owns is worth a king's ransome in potential real estate development.

As also noted, Hong Kong is very capitalistic with poor labour regulations, low wages for unskilled workers, and a city that thrives on real estate developers and the money they bribe the politicians with.

[Wizened Variations]

Another form of government funding could be to award undeveloped patches of land to the transit agency so whenever a developer comes along and builds something when the timing is good, then the transit agency can still own the land it's on and receive perpetual lease payments from them.

Great public transportation is not 'rocket science.' Factors such as good right-of-way, a minimum number of grade crossings, average speed, frequency, platform level boarding, public safety, and cleanliness have been known for a century or more.

Why is it, then, particularly in the US- with it's penchant for bragging about it's technology- seemly incapable of building a good transit system since WWII? If it is not technology or design related, then what factor(s) cause such poor transit systems to be built?

I suspect, that the private-public partnerships in the US are very corrupt. Moneyed players who stoke re-election politics call the shots. In large part, the public hearings and discussions are just for 'show'- the decisions about right-of-way, etc., are made behind closed doors. At best, the public is provided with a choice between two alternatives, both of which already been scrutinized by power brokers.

This, IMO, results, too often, in reverse engineered projects. Where the lines are to run, where the stations are to be placed, etc., seem to chosen prior to looking at public need. The resulting package then is sold as a "Vision of the Future" or a "Grand Scheme to Solve Future Transportation Needs" but too often results in a "Frankenstein" like conglomeration of parts that do not fit well together and cost far more than necessary to build as well as operate.

I believe that this type of real estate development driven public transportation planning can only change when enough people in a given community MUST either walk, or bicycle to work because cars are no longer affordable. At that point, the public will should be strong enough to look beyond the glitzy internet brochures and scream for something that works.*

All of this, of course, interconnects with NIMBYs, whose public view, too often is in response to add campaigns sponsored by moneyed parties.

*(In a non-democratic governed society, building to serve public needs is great PR, as the Chinese Central Party knows today).

[hammersklavier]

:previous: Well, there is one exception: the DC Metro. But that's arguably the exception that proves the rule.