11.522: UIS Research Seminar (Fall 2009) - Discussion notes
Abstract for 2009 Annual Conference of Association of Collegiate Schools of Planning
(with Prof. Chris Zegras)
Track 14: Transportation & Infrastructure Planning
Public transport systems have the potential to bring important societal benefits to metropolitan areas, possibly helping to increase accessibility levels, alleviate traffic congestion, reduce energy consumption and greenhouse gas emissions, facilitate economic agglomeration and development (Granham, 2007), etc. Such systems may also carry important private benefits, including potentially increasing land values for properties in the area of influence (e.g., McMillen and McDonald, 2004). Despite their societal and private benefits, public transport systems across the U.S. find themselves facing increasing financial difficulties. These difficulties partly stem from inappropriate transportation finance systems, seen in the failure to accurately price the overall transport system, dependence on imperfect subsidy mechanisms and revenue raising schemes (e.g., sales taxes), distortionary grant-making approaches for infrastructure financing, among others.
Chicago exemplifies these problems. For example, Antos' (2007) analysis of the metropolitan area's public transport operations' impacts on energy use, emissions, safety, congestion, and mobility suggests that system operations produce societal benefits twice as great as current operational subsidies. Building on Antos, the considerable empirical research base on land value effects of public transport (Smith and Gihring, 2006), and prior empirical examinations in Chicago (McMillen and McDonald, 2004), this paper aims to derive estimates of land value impacts of public transportation accessibility in Chicago and, based on those estimates, derive a viable mechanism for capturing that value to sustain public transport in the city.
To develop full estimates of the impacts of public transportation systems on land values in the Chicago metropolitan area, we examine residential and non-residential land uses at the disaggregate level in a cross-sectional way. The analysis includes micro- and macro-level measures of transportation accessibility derived from network models, land and property values and characteristics obtained from public and private databases, and a number of other socio-economic, demographic and other variables (e.g., school performance and crime). By employing several analytical techniques, including factor analysis (Gorsuch, 1983) to construct composite regional auto/transit accessibility measures, the traditional spatial hedonic price models (Rosen, 1974), and the spatial econometrics techniques-spatial error model(Anselin, 1988), we estimate the land value impacts of proximity to urban heavy rail systems, controlling among other factors, regional auto/transit accessibility.
We then use the resulting estimates of land value impacts to explore the viability of alternative financing schemes - such as land value taxation - to help sustain public transportation in Chicago. In practice, this research aims to provide a reasonable approach to help decision makers in Chicago and other cities (in the U.S. and elsewhere) understand whether and how value capture can be effectively employed to support public transportation.
Key Data Sources
This research uses: 1) data on residential and non-residential property sales prices and characteristics for years 2003 through 2005, obtained from the City of Chicago and a private commercial provider; 2) the 2004 Chicago transportation system operations data, including from the CATS transportation network model and the RTA transit network; 3) neighborhood socioeconomic data derived from 2000 census data; and 4) other neighborhood characteristics (land uses, school performance levels, etc.) gathered from a number of public sources.
Anselin, L. (1988). Spatial Econometrics: Methods and Models. Kluwer Academic, Dordrecht.
Antos, J. (2007). Paying for Public Transportation: The Optimal, The Actual, and The Possible. Thesis submitted to the Dept. of Urban Studies and Planning in partial fulfillment of the requirements for the degree of Master in City Planning, Massachusetts Institute of Technology, Cambridge, MA.
Gorsuch, R. L. (1983). Factor Analysis. Hillsdale, New Jersey. Lawrence Erlbaum Associates, Inc., Publishers.
Granham, D. (2007). Agglomeration, Productivity and Transport Investment. Journal of Transport Economics and Policy, Volume 41, Part 3, pp. 317-343.
McMillen, D. and McDonald, J. (2004). Reaction of House Prices to a New Rapid Transit Line: Chicago's Midway Line, 1983-1999. Real Estate Economics, Vol. 32, No. 3, 463-486.
Rosen, S. (1974). Hedonic prices and implicit markets: product differentiation in pure competition. Journal of Political Economy, Vol. 82, No. 1, pp. 34-55.
Smith, J. and Gihring, T. (2006). Financing Transit Systems through Value Capture: An Annotated Bibliography. The American Journal of Economics and Sociology, Vol. 65, No. 3, July, pp. 751-786.
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