In 2016, voters in San Francisco, Alameda and Contra Costa county approved a $3.5 Billion dollar bond to keep BART moving. Funds from the bond will be used to replace aging infrastructure throughout the system, but even three and half billion dollars will scarcely keep us running in place. Maintaining what we have long term — and eventually improving on what’s already in place — means finding a sustainable revenue stream for the system and reimagining how we fund transit in the Bay Area.

Hong Kong vs the Bay

Putting BART on permanently firm financial footing doesn’t mean reinventing the wheel. Commuter rail systems in East Asia figured out how to run profitably decades ago. And there’s no better example of what BART could be than the Metro Transit Railway Corporation (MTRC) in Hong Kong.

The MTRC operates 130 miles of track (roughly equivalent to BART). It transports over 5 million passengers a day (about 10x BART’s daily ridership). And it posts a 99.9% on time rate (let’s just say…way the hell better than BART).

MTRC System Map

The MTRC is able to maintain its first-in-class service levels because it doesn’t skimp on the upkeep. It employs approximately 5,000 technicians who physically inspect every inch of track once every three days. The rolling stock is given a similar level of attention. And the entire system is overseen from a state-of-the-art control center where management can identify problems in real-time. The result of all this preventative care is a transit system that reliably performs at scale and sets the standard for commuter rail worldwide.

All told, the MTRC spends an impressive US $700 million a year on maintenance and improvements. But perhaps the most amazing thing is that this $700 million comes out to less than 40% of the MTRC’s yearly revenue.

Value Capture Finance

The MTRC has two major revenue streams. The first is its ticket sales which drive enough revenue to cover operational costs. The other is the value generated from real estate holdings around each of its stations. This is where the MTRC makes the bulk of its money and how it pays for constant maintenance and reinvestment.

Real estate benefits from proximity to high quality mass transit. To whatever extent people are willing to pay a premium for access to transit, rental prices will be that much higher. In the Bay Area, private landholders with properties near each station internalize this windfall. But in Hong Kong, the MTRC is the property owner around each of its stations and this allows it to recapture that added value to reinvest back into the system.