What an M.T.A. chair learned by going to Hong Kong

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Walder. (via Harvard.edu)
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Two years ago, Jay Walder left the financially beleaguered M.T.A. for a substantially better-paying position managing Hong Kong’s much better-funded transit system.

Last week, he delivered an evangelical speech about what he learned.

Namely: don't rely on the public sector. 

"If the infrastructure is not self-sustaining, then the reality is that it cannot rely on public funding always being there," Walder said Thursday, at Harvard's Kennedy School. "At some point politics simply diverts the money elsewhere. And you might say it doesn't have to be that way, but that's just the reality of the case."

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Infrastructure needs "sustainable models," he said.

Hong Kong has one.

It's profitable, apparently exportable, and its trains run on schedule 99.93 percent of the time.

“Hong Kong has identified a way to support the urbanization and the density we want by sharing the benefits of the economic activity that it creates,” he said.

Or, in slightly plainer language: “The development of Hong Kong's rail system has largely been supported by the granting of development rights for the properties that are adjacent to the railway."

In Hong Kong, the independently run MTR Corp. buys the land adjacent to future rail lines from the government at pre-development prices and then, once the line is built and the land alongside developed, captures the growth in value of that land and uses it to fund rail operations.

"In that way, the increase in the value of the property becomes a proxy for the broader public benefit and aligns the financial basis with the societal benefit that is being created," said Walder. "And it also ensures that subject to normal business risk ... that the corporation has the proper resources not just to be able to build a rail line, but also to be able to operate it, maintain it and renew the systems and equipment over time."

As global urbanization picks up, MTR is now busy transporting that model to mainland China and Stockholm.

Here in New York City, meanwhile, Walder's former place of employ stagnates.

During Walder's brief tenure, one that coincided with the recession, he presided over fare hikes and some of the worst service cuts in years.

And while the M.T.A. is in fact expanding, it's doing so in small, exceedingly expensive fits and starts. A one-stop, $2.4 billion extension of the 7 train to the far west side will be done soon, using just the sort of tax-increment financing mechanism Walder is promoting. He didn't mention that project during his speech.

But he did mention the first phase of the Second Avenue Subway, one portion of a four-part project the rest of whose future remains in doubt. It will cost $4.45 billion, and when it opens in 2016, it will come several decades after it was first conceived. 

“I think no doubt it will create a tremendous amount of value," said Walder. "Will it reshape ... the Upper East Side of Manhattan? Yes it will reshape the Upper East Side of Manhattan. But we don’t have any mechanism to capture that back. And so we're sitting here today, as we're making progress on the first phase of the Second Avenue Subway, wondering about how we fund the second phase and how we fund the third phase and how we keep this going.”

Walder did offer praise for one recent New York City innovation, one that had nothing whatsoever to do with the M.T.A.

"I met my son in the East Village, and my next meeting was an appointment that I had in lower Manhattan," said Walder.

He CitiBiked there.

"I have to say that it's hard to overestimate how successful CitiBike has been in New York," he said.

"Am I suggesting somehow that a bikeshare program is ... the answer to sustainable transportation for a city of 8 million people?" he went on. "No. I am not saying that at all. But, you know something, congestion pricing was not the answer to all of London's transportation problems either. What they are is indicative of a new way of thinking. ... And I think it's that approach and I think it's that attitude that leads me to believe that even bigger and bigger ideas can be adapted in these cities. And maybe we can even take the Hong Kong rail-plus-property model and bring it to some of our older cities as well."

You can watch the whole talk here:

 

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