Transit Investment Feeds Economic Boom, Resulting in New Funding Needs

Posted on June 12, 2018 by Heather Redfern - Also by this author

SEPTA was able to move ahead with renovations to its 40th Street Market-Frankford Line Station with Act 89 funding. Photo: SEPTA
SEPTA was able to move ahead with renovations to its 40th Street Market-Frankford Line Station with Act 89 funding. Photo: SEPTA
Investment in mass transit leads to many rewards — for the region served by a transportation authority; for the passengers who use transit to get to work, school, appointments, shopping and recreational destinations; and for communities located near transportation stations and hubs.

To illustrate the effect, the Southeastern Pennsylvania Transportation Authority (SEPTA) has not only on the growth of five county region is serves, but also on the entire state of Pennsylvania, SEPTA commissioned Econsult Solutions Inc., a Philadelphia-based economic consulting firm specializing in areas such as transportation, public infrastructure, and real estate, to conduct an economic impact study, “SEPTA Drives the Economy of Pennsylvania.” The results of the recently released study were for a much different reason than the last study SEPTA commissioned from Econsult: then it was for funding to stay in business; now it is for funding to sustain growth.

In 2013, Econsult examined the impact the authority’s Regional (commuter) Rail system had on property values in the four suburban counties surrounding Philadelphia served by the railroad. “The Impacts of SEPTA Regional Rail Service on Suburban House Prices” looked at single-family house transactions from 2005 to 2012 and found that that the average property value premium for the 754,000 single-family homes located in Bucks, Montgomery, Delaware, and Chester  counties was $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 average between $31,000 and $37,000 per house.

Renovations to SEPTA's 40th Street Market-Frankford Line Station included two new ADA-compliant elevators. Photo: SEPTA
Renovations to SEPTA's 40th Street Market-Frankford Line Station included two new ADA-compliant elevators. Photo: SEPTA
The Econsult study demonstrated the importance of public transportation for both riders and non-riders. At the time of the study’s release, SEPTA had a $5 billion state-of-good-repair backlog that was estimated to grow to $6.5 billion by 2023 without additional state capital funding. The authority was facing a Service Realignment Plan that would suspend nine of 13 Regional Rail lines and truncate two others over 10 years, the conversion of trolleys to buses and a reduction of subway service levels. In November 2013, the Pennsylvania state legislature passed Act 89, providing the much-needed funding to SEPTA and transportation organizations across the Commonwealth.

“Without funding, we would not have been able to provide the same level of safe, reliable service,” said SEPTA Chairman Pasquale T. Deon Sr. “Much of our infrastructure was past or at the end of its useful life. We needed to be able to repair bridges and facilities, some of which are well over 100 years old, and purchase new vehicles. We had a ‘Doom's Day’ plan we did not want to put into effect, but would be forced to do so.” 

SEPTA GM Jeffrey Knueppel (left) shows U.S. Rep. Dwight E. Evans (second from right) and APTA President/CEO Paul P. Skoutelas (right) the circa 1930s electrical equipment used by SEPTA at its Wayne Junction substation to power its Regional (commuter) Rail lines. Funding from a Federal TIGER grant allowed SEPTA to renovate the substation with state-of-the-art equipment. (Photo by Adam N. Dall)
SEPTA GM Jeffrey Knueppel (left) shows U.S. Rep. Dwight E. Evans (second from right) and APTA President/CEO Paul P. Skoutelas (right) the circa 1930s electrical equipment used by SEPTA at its Wayne Junction substation to power its Regional (commuter) Rail lines. Funding from a Federal TIGER grant allowed SEPTA to renovate the substation with state-of-the-art equipment. (Photo by Adam N. Dall)

Fast forward five years since the passage of Act 89 and SEPTA’s Capital Program has grown by 70%, as detailed in the most recent Econsult economic impact study. The authority is moving forward with efforts to replace and repair critical infrastructure such as bridges, power substations, track, stations, and safety systems, while also replacing portions of its aging rail and bus fleet. The state of good repair backlog now stands at approximately $4.6 billion and shrinking.

“Act 89 has given SEPTA a new lease on life,” said SEPTA GM Jeffrey D. Knueppel. “Throughout our service area, we’re investing hundreds of millions of dollars annually in critical infrastructure work that will preserve the system for years to come.”

A safe, reliable transportation system is key for a region to attract new business and residents. With SEPTA’s 13 Regional Rail lines, two subway-elevated lines, eight trolley routes, a high-speed rail line, and 123 bus routes, Southeastern Pennsylvania boasts such a robust transit network, one that has played an important role in the region’s development over the last six years. From 2010 to 2016, Southeastern Pennsylvania accounted for the biggest population growth in the Commonwealth: +81,565. More than 31,400 of that upturn was along SEPTA’s Market-Frankford and Broad Street subway-elevated lines, which run east-west and north-south, respectively, through Philadelphia.

“With the new housing and business construction and the employment and population growth throughout our service region, we felt it was time to commission a new study to show SEPTA’s economic impact on the state,” said Deon. “We wanted to know what effect the passage of Act 89 has had.”

This map shows the concentration of applications for commercial and residential construction permits around SEPTA’s subway-elevated and trolley lines in Philadelphia. Photo: SEPTA
This map shows the concentration of applications for commercial and residential construction permits around SEPTA’s subway-elevated and trolley lines in Philadelphia. Photo: SEPTA
The results of Econsult’s new SEPTA Economic Impact Study found that the authority’s average annual contribution to Pennsylvania is: $3.05 billion to the economy; 23,370 jobs; and $1.7 billion in earnings. There is an additional $14.5 billion value for houses located near the Regional Rail lines. In Philadelphia, applications for commercial and residential building permits along the Broad Street and Market-Frankford Lines have outpace any other area in the city. The five counties that comprise Southeastern Pennsylvania generate 41% of the Commonwealth’s economic activity with 32% of the population on five percent of the land.

“SEPTA is the glue that holds the region together,” said Knueppel. “Regional Rail lines bring suburban workers to Center City (downtown) Philadelphia. Bus and trolley routes feed into the subway-elevated lines. New office towers in Philadelphia are being built with little or no parking. Because of this, 62 percent of all work trips into Center City are taken on transit.”

The Crum Creek Viaduct which dated back to 1895 was acquired by SEPTA from Conrail in 1983. Three decades later, the viaduct reached the end of its useful life and required replacement to ensure safe and efficient rail service for on the Media/Elwyn Regional Rail Line. Act 89 funding allowed SEPTA to replace the structure. Photo: SEPTA
The Crum Creek Viaduct which dated back to 1895 was acquired by SEPTA from Conrail in 1983. Three decades later, the viaduct reached the end of its useful life and required replacement to ensure safe and efficient rail service for on the Media/Elwyn Regional Rail Line. Act 89 funding allowed SEPTA to replace the structure. Photo: SEPTA
The infrastructure improvements SEPTA has been afforded as a result of Act 89 funding has helped make the Greater Philadelphia region a top competitor for many companies. This business growth has brought new challenges to the authority — how to maintain dependable service while growing capacity.

Regional Rail and subway-elevated cars are packed at peak operating hours. To ease congestion on the railroad, SEPTA is procuring multi-level cars to operate on its busiest Regional Rail lines. The authority is currently evaluating the morning “skip-stop” express service on its Market-Frankford Line to alleviate overcrowding at stations in neighborhoods that are being rediscovered by younger residents moving to the city. SEPTA is also exploring extending platforms and adding two cars to its current six-car Market-Frankford car consist.

For “reverse commuters” heading to work in the suburbs, last fall SEPTA launched its Boulevard Direct route to enhance its bus service between Northeast Philadelphia and Bucks County. This express-style bus reduces stops from 80 to eight and shaves 17 minutes off of the total trip time. Since the Boulevard Direct’s introduction in October, there has been a net ridership increase of 14%.

In addition, the authority is reaching the final planning stages of King of Prussia Rail Project, which would extend the Norristown High Speed Line to the heavily business populated King of Prussia area of Montgomery County. The KOP Rail Project began in late 2012 and is nearing the release of its Final Environmental Impact Statement. The KOP Rail extension would reduce travel time between Center City Philadelphia and King of Prussia by approximately 30 minutes each way. The 4.5-mile elevated extension would have five station stops with a total ridership projected at 9,500 trips per day by 2040.

“Act 89 was about SEPTA’s survival. This most recent study is about business and continued development,” said Knueppel. “We cannot be the limiter to the progress of our region. We need support for construction projects, to add capacity to our lines and to expand service.” 

Heather Redfern is the Public Information Manager for the Southeastern Pennsylvania Transportation Authority. 

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