On May 10, 2007, HDR Chief Economist and Senior Vice President David Lewis, Ph.D., testified before the House Committee on Transportation and Infrastructure’s Subcommittee on Highways and Transit, regarding the Federal Transit Administration’s implementation of the New Starts and Small Starts program. Lewis’ testimony centered on the economic value of transit projects, which he said falls into three main categories: congestion management, mobility for transit users, and community economic development.
The New Starts program is the federal government’s primary financial resource for supporting locally-planned, implemented, and operated transit "guideway" capital investments, including heavy rail, light rail, commuter rail, and bus rapid transit systems. The Small Starts program provides grants for capital costs associated with new fixed guideway systems, extensions, and bus corridor improvements. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) authorized $6.6 billion in New Starts funding through fiscal year 2009, with $600 million of this funding set-aside for Small Starts.
"In not recognizing the full economic value of transit projects, the federal New Starts process creates a risk of underinvestment in transit and, hence, the marginalization of public transportation investment in American urban development," Lewis said.
According to Lewis, HDR studies conducted for the Federal Transit Administration (FTA) indicate that rail transit stations yield about $16 greater residential equity value for each foot closer a property is to the station. "Findings in San Francisco, for example, indicate that the average home carries $15,000 more value for each 1,000 feet closer to a BART station," he said. "My studies for FTA also show that proximity to Metrorail in Washington, D.C., has a positive impact on commercial property values. We find that a 1,000-foot decrease in walking distance to a Metrorail station increases commercial property values by $2.30 per square foot."
Lewis testified that the New Starts framework ranks projects against one another as a basis for distributing funds, but does not seek to determine whether projects are economically worthwhile. "Without economic yardsticks," he said, "decision makers cannot ask how much transit investment is actually worthwhile, nor how transit projects stack up in relation to highway alternatives. … Failure to examine transit and highway projects against a common economic yardstick works to transit’s disadvantage in the competition for budgetary resources. … Evidence from the application of mainstream business case methods indicates that the benefits of a single New Start project can exceed its costs by almost $1 billion and produce net benefits greater than those associated with alternative highway capacity expansion projects."
Lewis previously served as a principal economist of the U.S. Congressional Budget Office. He is a Fellow of the Institute of Logistics and Economics and an elected Emeritus Member of the Transportation Research Board, serving on the Committee on Specialized Transportation. He is a co-author of the book "Policy and Planning as Public Choice: Mass Transit in the United States."
Lewis’s complete testimony is available at www.hdrinc.com.