Transportation funding and service cuts affect more than just riders

Across the country, public transit is experiencing record ridership growth. The increase in commuters is not only good for transit organizations’ revenue; proximity to train stations and transportation centers can boost property values for surrounding communities and spur new construction of transit-oriented developments (TODs), shopping centers and other businesses.

But what happens to communities when the “T” in the TODs is no longer there?

The Southeastern Pennsylvania Transportation Authority’s (SEPTA’s) funding issues have been well-documented: a $300 million capital budget with a current $5 billion state-of-good-repair backlog that is estimated to grow to $6.5 billion by 2023 without additional state capital funding.

Without this money, which is necessary for critical infrastructure repairs and aging vehicle replacement, SEPTA could be forced to implement a service realignment plan that suspends nine of 13 Regional Rail (commuter) lines and truncates two others over the next 10 years, as well as convert trolleys to bus and reduce subway service levels. The plan would be put into effect beginning next year short of an immediate infusion of additional capital funding to defer the cuts.

Lack of financial support for public transportation not only inconveniences millions of riders who rely on buses, trains and trolleys to get to and from work, school and shopping, but cuts in services can have a devastating impact on a community’s property values, too, potentially affecting even non-transit users.

“The Impacts of SEPTA Regional Rail Service on Suburban House Prices,” a recent study of the four suburban counties surrounding Philadelphia (Bucks, Chester, Delaware and Montgomery) serviced by SEPTA — specifically its commuter rail system — examines data on recent housing transactions in conjunction with the transit system’s Regional Rail lines to determine the incremental value of being located near a station. The study found that that the average property value premium for the 754,000 single-family homes located in those four counties is $7,900 (approximately $6 billion a total property value). In communities with higher levels of Regional Rail service and parking capacity, the property value premium averages between $31,000 and $37,000 per house.

The study, commissioned by SEPTA and conducted independently by Econsult Solutions Inc., a Philadelphia-based economic consulting firm specializing in areas such as transportation, public infrastructure and real estate, looked at single-family house transactions from 2005 to 2012 in Bucks, Chester, Delaware and Montgomery Counties and examined the property value premium that results from being located close to a Regional Rail station. The report, available at www.econsultsolutions.com, states that the property value premiums could vanish if SEPTA is forced to implement the realignment plan.

“You can really learn a lot about how much people value things by looking at the housing market,” said Richard P. Voith, president, Econsult Solutions. “It is absolutely clear that access to SEPTA rail service adds to property values.”

This bleak scenario in the Greater Philadelphia region is one that could possibly be repeated in cities across the country. For example, in the October 8, 2013 Boston Globe, columnist Paul McMorrow writes that inadequate funding for the MBTA could “stunt Boston’s growth”, as well as that of its surrounding communities.  

As Voith said, “Whether you use the system or not, it is in your best interests for [SEPTA] to continue to have a robust level of rail service. [SEPTA] contributes a lot to the overall attractiveness of the region.”

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