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Light Rail and Urban Development in the United States

October 06, 2017

For much of the second half of the 20th Century, cities in the United States developed by suburbanizing – wealthier families fled urban cores and settled in outlying areas, where the size of one’s house became a preeminent status symbol. Yet over the last few decades, these trends have reversed, at least among young, well-educated millennials. Between 2010 and 2015, in all but six of the country’s 33 largest metropolitan areas, population growth among educated millennials in core cities eclipsed that of their surrounding suburbs, with such populations in 13 cities growing at more than double the rate of their suburbs. [1]

By Jack Weisman

But younger people aren’t simply choosing to live downtown on their own. In many of the country’s fastest growing cities, investments in public transit have allowed their regions to capitalize on the urbanization of millennials and generate significant economic returns. Public transit ridership rose 37.5% between 1995 and 2014, [2] turning cities like Denver, Seattle, Portland, and Minneapolis, all of which invested heavily in light rail transit, into models of smart, modern urban growth.

Image: Light Rail Ridership by Year Data Source: American Public Transportation Association

Image: Light Rail Ridership by Year
Data Source: American Public Transportation Association

Arguably, the most notable transit success story is Denver, which continues to expand its 23-year-old light rail system and reap the benefits of new investment. Denver has focused heavily on transit-oriented development, which seeks to develop areas around transit stations into commercial and residential hubs, boosted by easy access to transportation facilities. In Denver, entirely new neighborhoods have popped up around light rail stations, with large, modern apartment buildings providing mixed-income housing to new parts of the city. Denver is also hoping to leverage its light rail system to aid its burgeoning tech sector, bringing new jobs and economic activity to the city. [3] Throughout the city, property values have skyrocketed near rail stations, with some neighborhoods experiencing threefold increases in land value. [4] Moreover, these benefits are not limited to Denver – in Dallas, a sprawling, car-friendly metropolis in a conservative state, extensions to the Dallas Area Rapid Transit light rail system generated over $2 billion in economic activity in 2014 and 2015 alone. [5]

And light rail is not the only form of transit that has been shown to generate economic growth. Bus rapid transit, which takes advantage of the flexibility and low cost of a bus, yet requires the dedicated traffic lanes and frequent headways that makes rail transit so desirable, has been shown to be a valuable investment. Cleveland, Ohio’s Healthline bus rapid transit system, which connects the city’s academic and medical institutions with its downtown, is widely praised as a successful experiment in bus rapid transit. New commercial and residential developments along the Healthline corridor have turned a $50 million investment into an estimated $5.8 billion in economic development – a return of $114.54 for every dollar spent on the project. [6] The Healthline is a somewhat unique case, as a 2014 study by the American Public Transportation Association found that, for each dollar spent on transit, cities experience $3 in economic returns [7] – certainly a significant figure, but nowhere near the number achieved in Cleveland. Still, the Healthline demonstrates that the benefits of transit are not limited to large cities with populations used to using public transportation.

But any focus on urban development is accompanied by concerns relating to gentrification, and the displacement of those who previously lived in newly-popular areas around transit stations. In Washington, DC, the construction of a streetcar light rail line in 2016 has been criticized for promoting further gentrification in a city that is often cited as one of the country’s worst offenders. However, recent development in Minneapolis has made it clear that transit-oriented development can benefit, not displace, existing residents. Despite concerns that the Green Line light rail line would harm low-income residents along its route, developments along the line included new affordable housing units, funded by tax breaks and grants from the city government. Existing local restaurants have seen marked upticks in business, and many shops have received loans from the government to make up for any loss in business caused by construction. [8] Of course, Minneapolis is a single example, and many cities aren’t as willing to invest in limiting the harmful effects of gentrification. Still, Minneapolis demonstrates that, as long as transit systems are developed with their communities in mind, they can serve old and new residents alike.

While he was running for president in 2016, Donald Trump made repeated mention of a $1 trillion infrastructure plan, supposedly a massive investment in fixing the American roads, bridges, railroads, pipelines, and buildings that have fallen into disrepair over decades of apathy and underfunding. [9] While President Trump has done little to live up to the promises that candidate Trump made on the campaign trail, proposing a budget that slashes funding for the Department of Transportation and encourages significant privatization, [10] infrastructure remains an important issue, and one of few issues about which there exists bipartisan consensus on the need to prioritize new investment. The infrastructural needs of different communities can vary greatly, but in urban areas, investment in light rail and bus rapid transit is a proven tool for commercial and residential development, serving economically diverse communities.

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  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

References

  [1] Pete Saunders, “Where Educated Millennials Are Moving,” Forbes, January 12, 2017. https://www.forbes.com/sites/petesaunders1/2017/01/12/where-educated-millennials-are-moving/#56309b8cd3cc.

  [2] Keith Barry, “Why More Americans Are Riding Public Transit than Ever Before,” Wired, March 11, 2014. https://www.wired.com/2014/03/rising-mass-transit-ridership.

  [3] Colin Woodward, “The Train That Saved Denver”, Politico, May 19, 2016. http://www.politico.com/magazine/story/2016/05/what-works-denver-rail-system-growth-213905.

  [4] Michelle Askeland, “Light Rail’s Impact on Office is Undeniable,” Colorado Real Estate Journal, March 16, 2016. http://crej.com/news/light-rails-impact-office-undeniable.

  [5] Michael C. Caroll et al., “The Economic and Fiscal Impacts of Development near DART Stations,” Dallas Area Rapid Transit, May 11, 2017. http://www.dart.org/about/economicimpact.asp.

  [6] Alison Grant, “Cleveland’s HealthLine Gives More Bang for the Buck than Other Transit Corridors, Study Finds,” Cleveland.com. http://www.cleveland.com/metro/index.ssf/2013/09/clevelands_healthline_gives_mo.html.

  [7] Economic Impact of Public Transportation Investment,” American Public Transportation Association, May 2014. https://www.apta.com/resources/reportsandpublications/Documents/Economic-Impact-Public-Transportation-Investment-APTA.pdf.

  [8] Steve Hargreaves and Dominic V Aratari, “How the Twin Cities Got Transit Right,” CNN, October 21, 2014. http://money.cnn.com/interactive/technology/minneapolis-light-rail/index.html.

  [9] Missing: Donald Trump’s Trillion-Dollar Infrastructure Plan,” New York Times, February 27, 2017. https://www.nytimes.com/2017/02/27/opinion/missing-donald-trumps-trillion-dollar-infrastructure-plan.html.

  [10] Mark Niquette, “Democrats Rip Trump’s Infrastructure Plan as ‘Sleight of Hand’,” Bloomberg, May 24, 2017. https://www.bloomberg.com/news/articles/2017-05-24/democrats-rip-trump-s-infrastructure-plan-as-sleight-of-hand.

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  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>