New York City transit density bonus v. San Fran transit impact fee

Stephen Miller at StreetsBlogNY has published a blog post about transit value capture. He compares the seldom used NYC transit density bonus granted to developers willing to invest in subway improvements to the transit impact fee assessed in the City of San Francisco. When pointing out the differences between the two programs, the author did not recognize that the lack of overlap in the mechanisms' justifications suggests that both NYC and SF could adopt both value capture mechanisms simultaneously.

The big distinction that Stephen points out is the different geographic scopes of the value capture mechanisms. The density bonus applies only to properties adjacent to NYC subway stations. In contrast, the SF transit impact fee is assessed on development occurring citywide.

What isn't highlighted in the post are the distinct justifications for the two forms of value capture. In NYC, policymakers saw an opportunity to grant valuable building rights to developers in exchange for costly subway improvements. In addition, one might also assume that policymakers perceived that locations proximate to transit were viable and potentially desirable locations for additional density. The transit density bonus is a voluntary transaction that we can assume only occurs when developers see more value in the additional density than the cost of making the improvements (including transaction costs of the public-private interaction).

On the other hand, the SF impact fee is justified based on addressing the externalities of new development. Policymakers justify the fee on evidence that real estate developments in SF generate additional transit demand which adds to the cost of providing transit (because new riders do not cover their full costs). For the mandatory fee to hold up legally, the fees be proportional to the impacts. Thus, it is likely that a similar NYC fee would need to account for the predicted ridership impacts that a project would have on the system--impacts proportional to the size of the development, land uses in the project, proximity to transit services, etc..

Because of the distinctiveness of the two programs' underlying justifications, it may be possible that the two value capture mechanisms could be implemented simultaneously. Now that's something the author might be very excited about!