I'm always amazed at how frequently the extreme case of Hong Kong's MTR introduces people to the concept of value capture and excites them enough to write about it in the public realm. In another such case, a writer at Market Urbanism has taken the bait and gotten hooked! In the process, Jeff Fong's two part post (part 1, part 2) also provides some insights from the economist's perspective.
Fong discusses the market efficiency of the Hong Kong's institutional structure. He suggests that high TOD transaction costs motivate consolidated/integrated firms like MTR (which he contrasts to vertically disintegrated firms that have relatively low transaction costs while coordinating to produce Apple's products). By owning property near its transit stations and acting as land developer, MTR significantly reduces the costs that would be borne by separate entities.
In the US, where such institutional combinations are improbable due to the politics surrounding private property rights, we're unlikely to see an MTR-like agency arise. Thus, based on Fong's arguments, we won't see transaction costs internalized and reduced by a property-oriented transit agency and we won't see transit agencies achieve market efficiencies in the ways experienced by MTR in Hong Kong.
Ian Carlton is a transportation and land use expert specializing in transit-oriented development (TOD). He helps clients - including transit agencies, planning departments, and landowners - optimize real estate development around transit.
Special thanks to Burt Gregory at Mithun for permission to use the Portland Streetcar image above.