Driving up revenues

Congestion charge: This is a type of fee charged for vehicles using the more crowded parts of a city and at peak travel times. The rationale is that everyone using vehicles on city roads imposes a cost on society, by way of the congestion caused, and so should pay for it. The congestion charge serves to recover the true social cost of using a personal vehicle and encourages greater use of public transport, which is more sustainable. For instance, London levies a fee of £10 on every private car entering the core city area.

Vehicle ownership restraints: This is a restriction on vehicle ownership itself, in the belief that fewer owners will mean lower use and thus less need for investments in road infrastructure. Singapore requires that anyone seeking to purchase a car first obtain a ‘Certificate of Entitlement’ at bimonthly auctions. Only those who succeed in obtaining such a certificate can buy a car. Another method of restraint is to charge a high vehicle registration fee when the car is first registered. This also helps secure significant revenues.

Commercial exploitation of property: Public transport agencies own substantial property – transit stations, terminals and depots – in premium locations in the city. These are high-value assets and the space or ‘air rights’ above them can be commercially exploited to raise resources. Building office complexes and residential accommodation on such property can bring in significant revenues. This is becoming one of the most important sources of income for many transit operators today. For example, according to its 2011 annual report, the Hong Kong metro system earned a profit of HK$4.9 billion (approximately $630 million) from property development.

Land value capture: Investments in mass transit facilities tend to raise the value of the property in the vicinity of the transit station. This enhanced value accrues to the owner of the property. The rationale for this fee is that the owner must share in the cost of the investment that enabled this increase to take place. This is usually charged by increasing the property tax for properties that benefit from the investment. Colombian cities have used this resource extensively.

Advertising rights: Since public transport systems are used by many people, public transit vehicles and stations tend to be attractive locations to place advertising, and these rights can be sold for a fee.


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