Three years ago, while deep in the unknowns of quarantining, this author wrote a post wanting for the past and worrying about the future. The title of the article was a question, “Has Covid-19 And Its Accelerated Work-From-Home Experiment Permanently Changed The Future Of Cities?” As discussed in this article, it appears that the answer is yes, and both public transportation and cities have been (and, as argued below, should further be) permanently altered as well.
In the world of public transit two popular buzz phrases over the past several months have been the “fiscal cliff” and the “death spiral,” as many transit agencies asked for (and mostly received) bailouts from their respective constituent governments to avoid tumbling over said cliff. Of course, the fiscal cliff is not an actual cliff, and the concept doesn’t equally apply to all transit agencies. Operators of transit systems that rely heavily on farebox revenues (i.e., tickets/fares) to run their systems are in peril as such revenues have continued to lag pre-pandemic numbers. On a related note, the “death spiral” refers to the phenomena that result from a lack of such revenues leading to painful service cuts and further alienating riders who are already using the systems less.
Transit systems with other sources of revenues, like a portion of sales taxes, which are common throughout California, are not facing the same fiscal cliff. In fact, some of those agencies fared quite well during the pandemic. One reason is the 2018 U.S. Supreme Court case, South Dakota Department of Revenue v. Wayfair, Inc., which required outside businesses to collect a state’s sales and use taxes from its customers for items purchased through the internet, purchases that skyrocketed during the pandemic.
But even if some transit agencies face more dire circumstances than others, all transit agencies are struggling with fewer riders—which may impact voters’ appetite for imposing more taxes to expand or better support those agencies in the future. Failure to sway voters to support such endeavors could limit the growth plan of a city or broader regional area. Also, as transit systems yearn for riders while simultaneously needing to appease voters, many cities across the country are approaching their own “urban doom loops” from dwindling office workers caused by remote work (both full-time and hybrid) or the elimination of jobs that are traditionally centered in urban areas. The lack of office workers is leading retailers and restaurants to either lay off employees or close. Vacancies and diminished foot traffic may also lead to more street crimes in the middle of a workday.
For example, there has been a two-thirds increase in Southern California office space vacant since the beginning of 2020. Downtown Los Angeles recently had a 25% vacancy rate, while San Francisco has had around a 30% vacancy rate. Another whammy to cities and commercial buildings stems from the approximately $80 billion of loans maturing this year that are collateralized by commercial buildings. And most of these loans require refinancing when interest rates have skyrocketed while occupancy has plummeted, so the prospects of repayment are slim. Therefore, many loans on such buildings will default, threatening lenders with losses and cities with buildings that may have significant delays or outright defaults on property tax payments. These tax payments are a primary funding source for many cities, and reductions in them could lead to reduced funds to pay critical city workers like police, firefighters, and other critical government employees, thereby worsening safety and other services that voters are mindful of.
So, how can cities and public transit agencies pivot toward the future? Cities must first accept that “the 9–5 city” is dead. Next, cities must focus on the new reality and the needs and expectations of all constituents (especially voters). Convenience is a top factor in most of the decisions we make. Cities will need to focus on convenience for a wider swath of riders, not only daily commuters. Here are a couple of pivots underway that may eventually maximize the use and effectiveness of public transportation and the cities and regions they serve.
Conversion of commercial properties to residential uses
In addition to emptier transit systems and suffering businesses, many cities (particularly those on either coast) also suffer from a lack of affordable housing. Rent increases, one of the many perils wrought by rising inflation, have made living in already expensive cities less feasible for many people. With a rising number of commercial properties sitting empty, one option involves converting empty spaces into affordable units. These conversions are happening in many cities throughout the United States. In fact, thus far, Los Angeles County has generated more housing units from office conversions than any other U.S. city.
One of the issues is that it may not be financially plausible to convert commercial buildings to residential uses. Challenges of commercial building conversions include providing enough sunlight through windows, as well as the significant differences between the mechanical, plumbing, and electrical systems than in residential buildings. Some buildings will just be too expensive to convert and may be demolished and turned into warehouses or other allowable commercial uses, which will inevitably change the look of many cities. Cities should consider providing tax breaks to usher these conversions to make them plausible because when residents can afford to live in cities with existing public transportation, it is highly likely these residents will see the convenience of using public transportation versus other modes of travel.
Transit systems should shift their focus from commuters to night and weekend riders
Many things in modern life are measured by a combination of convenience and speed, most often thanks to technology. Transit agencies can shift the focus of public transportation from business districts—which were intended to be busy from 9–5—to rebalance towards concerts, sporting events, and culture centers like museums, theaters, and colleges by increasing train lines on the weekends and evenings and reducing them during the workdays.
Many transit agencies have noticed an uptick in weekend travel post-pandemic. Why? Typically, on the weekends, people have more time to travel. Perhaps they imbibe more. Perhaps they are heading to an event with exorbitant parking fees and feel incentivized to use public transportation. Cities need to embrace that their future (and, in many ways, their present) relies on accepting their purposes as centers of education, entertainment, and social gatherings. Focusing on a wider swath of visitors to cities and potential riders of public transportation could expand the happiness of potential voters in 2024 and beyond. Those voters hold the power to decide the fate of transit systems and the cities they serve. While the 9–5 city may have gone away, could a truly on-demand city, one with updated infrastructure connected to autonomous vehicles and apps providing real convenience, be near? Time—plus votes and policy—will tell.
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