Rail projects involve many stakeholders: the end user; the city and regional government agencies; consultants; the general contractor and the various suppliers. Ideally all the interests of this chain would be aligned, but there can be competing interests.
On a political level, democratically elected leadership typically changes much more quickly than the time it takes to plan and deliver a rail project. The best strategy is to focus early on building wide support for the project among the general public and the key stakeholders.
When it comes to different transport modes, competition can be challenging. In Canada, there are some municipal operators that provide several modes – Metrolinx in Toronto is one example, operating the GO Train and the GO Bus. However, this is certainly not the situation everywhere and the priority should always be maximising ridership. As an example, the State of California’s Rail Plan, published in 2018, calls for a series of capital investments to improve physical connections at key nodes, as well as changes to operations and inter-operator agreements to achieve a seamless and fast system from a user perspective.
Ultimately, in order to manage our long-term relationships and stakeholders, we must better understand the ‘customers’ and ‘beneficiaries’ and the differing roles of the partners and partnerships involved. In mass transit and urban mobility, the customer extends far beyond the passenger.
Understanding this hierarchy of beneficiaries is the key. Transport cannot always be considered as modal, when stakeholders are involved. Understanding the needs of the city and region and the economic customer needs is vitally important, and always ranks above modal considerations.
In general, better service can and should be aligned with increased revenue, and this can be acceptable to both passengers and the wider customer if the message is brought to market in a logical and mindful way. The various customers must be at the heart of decision-making and should be informed and involved, so that there can be a ‘bargain with the customer’ around the costs of improving transport services.
The future of finance and funding
There is no silver bullet. With few exceptions globally, urban rail projects do not generate sufficient revenues from their own operations, and thus need a diverse mix of funding and financing sources to succeed. In contrast to funding, financing is relatively easy, as often the financial systems and markets can come up with solutions that respond to the funding plan of a given project. Problems can arise, but these tend to be either regulatory or political.
The real challenge is the funding plan and the challenge of capturing the economic value created by the rail investment itself. Approaches can be categorised into two groups: value capture from taxpayers and value capture from developers. The first category includes mechanisms such as land / property value tax. The second category includes mechanisms such as selling or leasing publicly owned land in the project’s influence area or selling or leasing air rights. These mechanisms can be combined and scaled, and are financeable. Mega-projects such as Crossrail in London have funded more than one-third of their capital costs with these mechanisms. The key is that the optimal project strategy should follow an integrated approach that puts the end user and the economic benefits front and centre.
Finally, it is important to note that rail projects are realising more and more of the value of partnerships with the private sector.