Solving Cities

How can transit agencies make money? Look to Hong Kong

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Imagine if transit agencies that run the most popular transit lines in the United States didn't have to worry about major budget cuts, service cuts, or fare increases. Hong Kong provides a model that could keep transit agencies in the black.

Imagine if the transit agencies that run the most popular transit lines in the United States didn't have to worry about major budget cuts, service cuts, or fare increases.

First off there would be less blogs like this one. But even more importantly, cities could adequately meet the growing demand for public transportation and move people quickly and reliably throughout cities.

Hong Kong's metro system, MTR, has found an innovative way to avoid the budget issues that plague many U.S. transit agencies. Instead of focusing solely on transit, MTR recognizes the high value of property near its transit stations (think retail, housing, offices near rail stations or retail clustering near interstate exits) and capitalizes on it. Alex Marshall at Citiwire explains:

Hong Kong’s MTR doesn’t let private developers be the only ones that perch next to its stations. It builds its homes, offices and stores. In short, MTR acts as a real estate developer and business company, as well as a train operator. It owns, among other things, 12 shopping malls built around its stations. These properties and businesses produce substantial cash, which keep the transit agency as a whole in the black.

By playing the role of developer as well as transit agency, MTR is cashing in. It's been so successful that MTR is listed on the stock exchange. But can the model work in the U.S.? Marshall says it's not a new model to the U.S.

While it may seem extraordinary to have a transit company operating like a profit-making company, it’s not novel. A century ago private streetcar lines made money more on the homes and shops built around their tracks, on company-owned land, than the nickel fares they received.

It's a model that would free up transit agencies to invest more in infrastructure, improve services and make getting around cities faster and more efficient. All that without raising taxes or fares.

Photo: mandinlondon/Flickr

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Tyler Falk

Contributing Editor

Tyler Falk freelance journalist based in Washington, D.C. Previously, he was with Smart Growth America and Grist. He holds a degree from Goshen College. Follow him on Twitter. Disclosure