When it comes to implementing a new public transport service, the focus is often on the social and environmental advantages. However, the financial impact for the communities involved can be just as important. With funding from the Agence métropolitaine de transport and the help of his team, Jean Dubé of Université du Québec à Rimouski conducted research to measure the impact of the installation of a commuter train line on the land rent of the serviced communities. The main objective of the study was to evaluate the potential return on investment for the operator and the municipalities that fund the implementation of the service.
Jean Dubé used the difference-of-differences approach to hedonic modelling that was tested, several years ago, on the Québec City Métrobus project. This method consists of determining the impact of a public decision – in this case, the installation of a commuter train line – on the value of nearby homes based on pairs of observations (pre- and post-implementation), by considering all of the factors that influence the appreciation in value of each characteristic of a home. For example, these factors could include the sale conditions, the size of the home, its age and its closeness to services.
Two projects were examined: train service on the Saint-Hilaire–Montréal line, on the South Shore, and that on the Saint-Jérôme–Montréal line, on the North Shore. With the help of funding from the Agence métropolitaine de transport, for whom the research was being conducted, Jean Dubé and his team obtained data on almost 24,000 real estate transactions involving homes close to the two train lines over a period of more than 15 years, from 1992 to 2009.
Research suggests that adding a new public transport service has a strong positive influence on land revenues.
The preliminary results of the study indicate that the land value of the homes close to the South Shore line increased by close to $1 billion, representing approximately $10 million in additional land revenues per year for the municipalities in question. The effect was less pronounced in the case of the North Shore line, largely due to socioeconomic and geographic characteristics that significantly reduce the impact of the presence of commuter rail service on the land values of the surrounding homes.
All research suggests that adding a new public transport service has a strong positive influence on land revenues. The results of the present study show that the increase in tax revenues would cover a good portion, if not all, of the cost paid by the municipalities for implementing train service. As these costs are in the millions of dollars – $7.5 million in the case of the South Shore line – this tax benefit is an important factor in favour of the investment in new transit services by municipalities. A reduction in road traffic and its environmental impact (noise, air emissions, road maintenance) as well as increased access to transit services are among the immediate benefits for the citizens of Montréal and its neighbouring communities.