I would like to advocate for the implementation of the Hong-Kong transit model (or parts thereof) in Europe and France in particular.

In HK, the transport company is also the owner of large residential, retail and office buildings. This allows to really «channel» passengers streams whilst reaping the benefits of the (substantial) investments represented by this infrastructure.

Here is a youtube video describing the model.

An example ?

Let’s take the example of a large French city, such as Orléans – where I lived for a year. The public company in charge of the transport network is called TAO.

When the city has to build its next tram line, plans for housing (low-rent or regular), shopping centres and offices should be identified along the route to be built. Plans for major public facilities (stadiums, concert halls) could also be included.

The land required for the construction of the buildings must be transferred to TAO at current market prices, prior to the tram project (if necessary, through compulsory purchase, as with any infrastructure project). It is, in fact, the tramway that adds value to the surrounding land and buildings.

TAO will then need to carry out its construction projects in an integrated manner: the tramway, the stations, the buildings and public spaces must be planned and built together.

When the transit line is open and running, TAO could then sell some of the estates, rent housing, retail or office spaces in the buildings along the tramway line. This way, TAO recoup an important part of the investments costs incurred by the project. In the long run, a significant proportion of the company’s revenue will come from rent on properties along its infrastructure. This rent will, actually, subsidise public transport.

In the long term, after 15 to 20 years, TAO should be able to build all its infrastructure projects without taking on debt (or at very low rates, as there is a guaranteed return on investment). Ticket prices should be fairly low and the entire tram network will operate without public subsidies (and may even be able to pay dividends to its owner: the Orléans metropolitan Corporation – though, personally, I’m not too keen on that idea).

This way, we’re killing two birds (or more) with one stone: building and funding transport infrastructure whilst tackling the housing shortage.

Include large public facilities

In addition to large residential estates, shopping centres and office blocks, other examples include major sports facilities or entertainment venues, some of which must be partly owned by the transport company.

One example would be where, when a stadium is being built by investors, the transport company negotiates a 5 per cent stake in the stadium in exchange for the construction and integration into the project – or even into the building itself – of the metro or tram station intended to serve the stadium.

It is important to remind that it’s because you have mass transit available nearby that this venue will be popular, just as it is this venue that ensures that this transport route is used, without the surrounding streets becoming congested with traffic.

We stay in a non-zero sum game.

The driving force behind urban planning

This effectively transforms what is essentially just a public enterprise responsible for operating trams into a genuine driving force behind urban planning. This makes perfect sense as transports and the flow of people shape the urban environment and contribute to its economic efficiency and the quality of life of its inhabitants.

This is what is often missing in many cities: a holistic vision. It is the city as a whole that constitutes an economic system which must be taken into account.

A degree of autonomy from the authorities

Thanks to this long-term management approach and the direct returns on investment, the transport company becomes more financially independent from its owner and contracting authority: the local council, the metropolitan authority or the urban community.

I have read and heard that infrastructure is often already financed through similar financial agreements, but these remain, all too often, under the control of politicians, who would always try to meddle in or use it to gain influence and power, at the cost of the public money or service quality. Here it’s about setting it in stone in an institutional manner.

It will then look like some of the public utilities, phone and power companies. It is, in fact, a form of public-private partnership (where a company funds public infrastructure and recoups its investment through long-term tolls – such as on motorways), except that, here, the public sector is on both sides of the arrangement, whilst the private sector (the real businesses) are merely the builders or building managers.

The company remains the implementing body for a long-term policy. This shall remain its mission: to provide an efficient, low-pollution urban transport service at the lowest possible cost to passengers and users of the urban environment; and it must report publicly and regularly to both politicians and the public on these various tasks.

I doubt that this model can run efficiently on a larger scale, as this would mean that the transport company should own half of each city where there is a train station.

We can notice that this model is partly implemented in Europe, with some success, by the city of Copenhagen.